<PAGE>
Filed Pursuant to
Rule 424(b)(3)
Registration No. 333-56859
PROSPECTUS
NORTHWEST BANCORP, INC.
152,927 SHARES OF COMMON STOCK (ANTICIPATED MAXIMUM)
Northwest Bancorp, Inc. (the "Company") a Pennsylvania corporation, which
owns 100% of the common stock of Northwest Savings Bank ("Northwest" or the
"Bank"), a Pennsylvania--chartered savings bank headquartered in Warren,
Pennsylvania, is offering up to 152,927 shares of its common stock, par value
$.10 per share (the "Common Stock"), pursuant to an Agreement and Plan of
Merger Between Northwest Savings Bank and Corry Savings Bank, dated as of June
19, 1997 (the "Agreement"), and the related Corry Savings Bank Plan of Merger
and Stock Issuance Plan (the "Plan"). Pursuant to the Agreement and the Plan,
the Company is offering such shares to certain depositors of Corry Savings
Bank and others in a subscription offering (the "Subscription Offering") and
may offer shares to certain other persons in a community offering (the
"Community Offering" and together with the Subscription Offering, the
"Offering"). Approximately 69.5% of the currently outstanding shares of Common
Stock are owned by Northwest Bancorp, MHC, a Pennsylvania chartered mutual
holding company (the "Mutual Company"). At the time of the completion of the
Offering, Corry Savings Bank, a Pennsylvania--chartered mutual savings bank
headquartered in Corry, Pennsylvania ("Corry Savings"), will merge with and
into Northwest (the "Merger") with Northwest as the surviving institution. In
certain circumstances the total number of shares of Common Stock to be offered
in the Offering may be increased by up to 15%. See "The Offering and Merger--
Stock Pricing and Number of Shares to be Issued."
(CONTINUED NEXT PAGE)
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THESE SECURITIES ARE SUBJECT TO INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF THE PRINCIPAL INVESTED. FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY EACH PROSPECTIVE INVESTOR, SEE
"SPECIAL CONSIDERATIONS."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
PENNSYLVANIA DEPARTMENT OF BANKING, OR ANY OTHER FEDERAL OR STATE
AGENCY OR ANY STATE SECURITIES COMMISSION, NOR HAS SUCH COMMISSION,
CORPORATION, DEPARTMENT OR OTHER AGENCY OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
--------------
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS OR
DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
OR ANY OTHER GOVERNMENT AGENCY. THE COMMON STOCK IS NOT GUARANTEED BY
THE COMPANY, THE MUTUAL COMPANY OR THE BANK. THERE CAN BE NO
ASSURANCE THAT THE TRADING PRICE OF THE COMMON STOCK WILL NOT
DECREASE AT ANY TIME.
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<TABLE>
<CAPTION>
ESTIMATED ESTIMATED FEES ESTIMATED NET
SUBSCRIPTION PRICE (1) AND EXPENSES (2) PROCEEDS
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<S> <C> <C> <C>
Minimum Per Share
(3)(4)................ $ 11.25 $ 2.21 $ 9.04
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Midpoint Per Share
(3)(5)................ $ 11.25 $ 1.88 $ 9.37
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Maximum Per Share
(3)(6)................ $ 11.25 $ 1.63 $ 9.62
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Minimum Total (3)(4)... $1,271,621 $250,000 $1,021,621
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Midpoint Total (3)(5).. $1,496,025 $250,000 $1,246,025
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Maximum Total (3)(6)... $1,720,429 $250,000 $1,470,429
</TABLE>
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(1) The Estimated Subscription Price Per Share is based on the last sale price
of Common Stock on August 12, 1998, of $12 1/2 per share, as reported by
the Nasdaq National Market. The aggregate Estimated Subscription Price is
based on the Independent Valuation.
(2) Includes estimated costs and expenses incurred or expected to be incurred
by the Bank and Corry Savings in connection with the Offering and the
Merger, including a fee to Ryan, Beck & Co., Inc. of $30,000. See "The
Offering and Merger--Plan of Distribution and Selling Commissions."
(3) Assumes that all shares are purchased by Eligible Account Holders at the
"Adjusted Price Per Share" which, for purposes of this table is assumed to
be equal to 90% of the last reported sale price of Common Stock on August
12, 1998. Assumes that no shares are purchased by the ESOP.
(4) Assumes that the final appraisal is equal to the minimum of the Valuation
Range (as defined herein).
(5) Assumes that the final appraisal is equal to the midpoint of the Valuation
Range (as defined herein).
(6) Assumes that the final appraisal is equal to the maximum of the Valuation
Range (as defined herein).
LOGO
THE DATE OF THIS PROSPECTUS IS AUGUST 12, 1998
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(CONTINUED FROM NEXT PAGE)
In accordance with the Plan and subject to certain maximum and minimum
purchase limitations, nontransferable subscription rights to purchase Common
Stock have been granted to: (i) Corry Savings' account holders who had deposit
accounts totaling $50 or more as of the close of business on March 31, 1996
(the "Eligibility Record Date," and such depositors "Eligible Account
Holders"); (ii) Corry Savings' account holders who had deposit accounts
totaling $50 or more as of the close of business on December 31, 1997, (the
"Supplemental Eligibility Record Date," and such depositors "Supplemental
Eligible Account Holders"); (iii) Corry Savings' account holders as of the
close of business on July 20, 1998 (the "Voting Record Date"), the voting
record date for the Special Meeting of Corry Savings' depositors being held to
approve the Plan ("Other Depositors"); (iv) employees, officers and trustees
of Corry Savings ("Eligible Employees and Trustees"); and (v) the Northwest
Savings Bank Employee Stock Ownership Plan (the "ESOP"). Any shares of Common
Stock not purchased in the Subscription Offering will be offered for sale in
the Community Offering, with a preference given to persons residing in Corry
Savings' local community.
In connection with the Merger and the Offering, Corry Savings has obtained
an updated independent valuation (the "Independent Valuation") of its pro
forma market value assuming a merger with Northwest. The number of shares of
Common Stock offered in the Offering will be equal to approximately 30.5% of
the quotient obtained by dividing the Independent Valuation as updated at the
conclusion of the Offering by the "Unadjusted Price Per Share" which shall be
equal to the lower of (i) the average of the highest closing bid price of the
Common Stock at the close of trading of each of the 20 trading days prior to
the date of the completion of the Merger and Offering (the "Effective Date"),
and (ii) the highest closing bid price of the Common Stock on the last trading
day prior to the completion of the Merger. The Company will offer shares of
Common Stock to Eligible Account Holders at a 10% discount to the Unadjusted
Price Per Share (the "Adjusted Price Per Share").
The Independent Valuation has been performed by Feldman Financial Advisors,
Inc. (the "Independent Appraiser"), a firm experienced in the valuation and
appraisal of savings institutions. The Independent Appraiser determined that
as of April 28, 1998, the appraised value of Corry Savings was within a range
of between $4,632,500 to $6,267,500 (the "Valuation Range") with a mid--point
of $5,450,000. The Independent Valuation will be updated and the aggregate
purchase price of the Common Stock to be sold in the Offering will be
determined immediately prior to the completion of the Offering. If the updated
appraised value of Corry Savings is outside the Valuation Range, the Offering
may be terminated, or a new valuation range may be established, in which event
subscribers will be resolicited and given the opportunity to modify or rescind
their order. See "The Offering and Merger; The Offering--The Independent
Valuation."
In order to purchase Common Stock each purchaser must complete and submit an
Order Form indicating the total dollar amount of Common Stock for which he is
subscribing. The subscription price per share of Common Stock for all
subscribers other than Eligible Account Holders will be equal to the
Unadjusted Price Per Share. The subscription price per share for Eligible
Account Holders will be equal to the Adjusted Price Per Share. Subject to the
applicable purchase limitations, the total number of shares that will be
issued to a subscriber whose subscription has been accepted will be equal to
the total dollar amount of stock for which such subscription has been accepted
divided by the Unadjusted Price Per Share or the Adjusted Price Per Share, as
applicable. Payment for subscriptions must accompany an order form and may be
made (i) in cash if delivered in person at the office of Corry Savings, (ii)
by check or money order, or (iii) by authorization of withdrawal from deposit
accounts maintained with Corry Savings. The Company, Corry Savings and
Northwest reserve the right to refund subscription funds in lieu of issuing
fractional shares, or permit subscribers to elect to receive additional whole
shares in this process.
The minimum amount of Common Stock for which any person may subscribe in the
Subscription Offering or in the Community Offering, respectively, is $500. No
person, other than the ESOP, directly or indirectly or with an associate or a
group acting in concert, may subscribe for or purchase in the aggregate more
than 5% of the total number of shares of Common Stock sold in the Offering, or
$95,579 of Common Stock based on the maximum of the Valuation Range. Such
stock may be purchased at a 10% discount (i.e., for $86,021) by Eligible
Account Holders. The maximum purchase limitation may be increased or decreased
as described herein. See "The Offering and Merger--Purchase Limitations."
All subscription rights will expire at 10:00 a.m., Pennsylvania time, on
September 15, 1998 (the "Expiration Date") unless extended by the Company,
with the approval of the Pennsylvania Department of Banking (the "Department")
if necessary, for up to an additional 45 days. Any shares not sold in the
Subscription Offering may be sold in the Community Offering, which also is
expected to terminate on September 15, 1998, but which may terminate as late
as October 30, 1998. Subscriptions paid by cash, check, or money order will be
placed in a segregated account at Corry Savings and will earn interest at
Northwest's regular passbook rate of interest from the date of receipt until
completion or termination of the Offering. Payments authorized by withdrawal
from deposit accounts at Corry Savings will continue to earn interest at the
contractual rate until the Offering is completed or terminated, and such funds
will be otherwise unavailable to the depositor until such time. Orders
submitted are irrevocable until the completion of the Offering; provided that
all subscribers will have their funds returned promptly, with interest, and
all withdrawal authorizations will be canceled if the Offering is not
completed by October 30, 1998, unless such period has been extended with the
approval of the Department, if necessary. No such extensions may go beyond
September 17, 2000. If an extension of time has been granted, all subscribers
will be notified of such extension, and of any rights to confirm, modify or
rescind their subscriptions and have their funds returned promptly with
interest, and of the time period within which each subscriber must notify
Corry Savings or the Company of his intention to confirm, modify or rescind
his subscription. If an affirmative response to any resolicitation is not
received by Corry Savings or the Company from a subscriber, the subscriber's
order will be rescinded and all funds will be returned promptly with interest,
and withdrawal authorizations canceled.
Consummation of the Offering is subject to the approval of the Plan by Corry
Savings' depositors at a special meeting called for such purpose, the
satisfaction of conditions contained in certain regulatory approvals and
letters of nonobjection, and the satisfaction or waiver of certain conditions
contained in the Agreement.
The Common Stock is listed for quotation on the Nasdaq National Market under
the symbol "NWSB." Ryan, Beck & Co., Inc. ("Ryan Beck") has advised the
Company that it intends to continue to act as a market maker for the Common
Stock following the consummation of the Offering. On August 12, 1998, the last
reported sale price of Common Stock, as reported on the Nasdaq National
Market, was $12 1/2 per share. The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "SEC").
2
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and, in accordance therewith, files reports, proxy statements and other
information with the SEC. Such reports, proxy statements and other information
can be inspected and copied at the public reference facilities of the SEC at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of such
materials can be obtained from the Public Reference Section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The SEC
maintains an Internet web sight that contains reports, proxy and information
statements and other information regarding issuers who file electronically with
the SEC. The address of that sight is http://www.sec.gov.
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Prior to the completion of the organization of the Company as the Bank's
holding company, the Bank was subject to the information, reporting and proxy
statement requirements of the Exchange Act and, in accordance therewith and with
the rules and regulations of the Federal Deposit Insurance Corporation (the
"FDIC"), filed reports, proxy statements and other information with the FDIC.
Copies of such materials may be obtained at prescribed rates from the FDIC's
Registration, Disclosure and Operations Unit, 550 17th Street, N.W., Washington,
D.C. The statements contained herein as to the contents of any contract or
other document filed as an exhibit hereto are of necessary brief descriptions
thereof and are not necessarily complete. Each such statement is qualified by
reference to such contract or document.
The Company has filed with the SEC a registration statement (the
"Registration Statement"), of which this Prospectus is a part, under the
Securities Act. As permitted by the rules and regulations of the SEC, this
Prospectus does not contain all of the information set forth in the Registration
Statement. In addition, certain documents filed by the Company with the SEC
have been incorporated in this Prospectus by reference. See "Incorporation of
Certain Documents by Reference." The statements contained herein as to the
contents of any contract or other document filed as an exhibit to the
Registration Statement or incorporated by reference into the Prospectus are of
necessity brief descriptions thereof and are not necessarily complete. Each
such statement is qualified by reference to such contract or document. The
information filed with the SEC can be examined without charge as described
above.
The Company will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of the Agreement and the Plan, and the Company's Articles of Incorporation
and Bylaws. Such requests, in writing or by telephone, should be directed to:
Gregory C. LaRocca, Secretary, Northwest Bancorp, Inc., Liberty and Second
Streets, Warren, Pennsylvania, 16365-2353, (814) 726-2140. In addition, the
Agreement, the Plan and the Independent Appraisal may be inspected at the
offices of Corry Savings at 150 North Centre Street, Corry, Pennsylvania.
Corry Savings will establish a stock sales center in connection with the
Offering, and the Common Stock will be marketed principally through the
distribution of this Prospectus and through the activities in the stock sales
center. Questions regarding the Offering should be addressed to the persons at
the stock center. The stock sales center will be located at Corry Savings Bank,
150 North Centre Street, Corry, Pennsylvania. The telephone number of the stock
sales center is (814) 664-4681. The stock sales stock center is expected to
operate during normal business hours throughout the period of the Offering. See
"the Offering and Merger--Description of Sales Activities."
3
<PAGE>
SUMMARY
The following summary does not purport to be complete, and is qualified in
its entirety by the more detailed information contained elsewhere in the
Prospectus or in the documents incorporated by reference.
<TABLE>
<CAPTION>
<S> <C>
Northwest Bancorp, Inc. The Company is a Pennsylvania corporation that was
formed to become the stock holding company of the
Bank in a transaction (the "Two-Tier
Reorganization") that was approved by the Bank's
stockholders on December 10, 1997, and completed on
February 17, 1998. In the Two-Tier Reorganization,
each share of the Bank's common stock was converted
into and became a share of Common Stock of the
Company, and the Bank became a wholly-owned
subsidiary of the Company. The Mutual Company, which
owned a majority of the Bank's outstanding shares of
common stock immediately prior to completion of the
Two-Tier Reorganization, became the owner of the
same percentage of the outstanding shares of Common
Stock of the Company immediately following the
completion of the Two-Tier Reorganization. As of the
date hereof, the sole activity of the Company is the
ownership of all of the issued and outstanding
common stock of the Bank and the ownership of
approximately 65% of the outstanding shares of
common stock of Jamestown Savings Bank. Jamestown
Savings Bank was formed in November of 1995 as a de
novo New York-chartered savings bank headquartered
in Jamestown, New York. As of March 31, 1998,
Jamestown Savings Bank had assets of $55.7 million
and deposits of $49.8 million.
Northwest Savings Bank The Bank is a Pennsylvania-chartered stock savings
bank headquartered in Warren, which is located in
northwestern Pennsylvania. The Bank is a community-
oriented institution offering traditional deposit
and loan products, and through its subsidiaries,
consumer finance services. The Bank's mutual savings
bank predecessor was originally founded in 1896. The
Bank in its current stock form was established on
November 2, 1994, as a result of the reorganization
(the "Reorganization") of the Bank's mutual
predecessor into a mutual holding company structure.
At the time of the Reorganization, the Bank issued a
majority of its to-be outstanding shares of common
stock to the Mutual Company (which was formed in
connection with the Reorganization) and a minority
of its to-be outstanding shares to stockholders
other than the Mutual Company. At March 31, 1998,
the Bank had total assets of $2.41 billion, total
deposits of $1.99 billion and shareholders' equity
of $213.3 million.
Corry Savings Corry Savings Bank is a Pennsylvania chartered
mutual savings bank located in Corry, Pennsylvania.
The primary business of Corry Savings consists of
attracting deposits from the general public and
originating residential mortgage and consumer loans.
Corry Savings conducts its business from one office
located at 150 North Centre Street, Corry,
Pennsylvania. Corry Savings' deposits are insured by
the FDIC through the SAIF, and Corry Savings is a
member of the Federal Home Loan Bank of Pittsburgh.
As of March 31, 1998, Corry Savings had assets of
$29.0 million, net loans receivable of $21.2
million, deposits of $25.2 million and retained
earnings of approximately $3.1 million.
Special Considerations Attention should be given to the matters discussed
under "Special Considerations," which include a
discussion of certain federal income tax
consequences of the transaction to Eligible Account
Holders; the potential adverse impact on the Bank of
changes in interest rates; extensive governmental
regulation
4
<PAGE>
of the financial institution industry; the possible
decline in the market price for the Common Stock
after the Offering; the inability to sell Common
Stock until issuance and receipt of the
certificates; the highly competitive environment in
which the Bank operates; capability of the Bank's
data processing to accommodate the year 2000; and
certain anti-takeover provisions with respect to the
Company.
Use of Proceeds Although the actual net proceeds from the sale of
the Common Stock cannot be determined until the
Offering is completed, it is presently anticipated
that, based on the assumptions set forth in "Use of
Proceeds," the net proceeds will be between $654,000
and $1.1 million, assuming that: (i) all the shares
of Common Stock offered in the Offering are
purchased by Eligible Account Holders at the
Adjusted Price Per Share; and (ii) a number of
shares of Common Stock equal to 3% of the Common
Stock sold in the Offering is purchased by the
Bank's Recognition and Retention Plan for awards to
employees, such open market purchases are funded
with proceeds from the Offering, and the purchase
price per share is equal to the Unadjusted Price Per
Share. The net proceeds of the Offering will be
initially invested in federal funds and investment
grade, short-term marketable securities, or used for
general corporate purposes.
Dividend Policy The Bank or the Company has paid cash dividends
every quarter since the completion of the
Reorganization and minority stock issuance in
November 1994, and it is the current policy of the
Company to pay a quarterly cash dividend of $.04 per
share of Common Stock. During the fiscal years ended
June 30, 1997 and 1996 the Bank declared and paid
cash dividends totaling $.16 and $.152 (as adjusted
for the Bank's May 22, 1996 and November 20, 1997
two-for-one stock splits), respectively, per share
of Common Stock. As of the date hereof the Company's
primary asset is the common stock of the Bank, and
its principal source of income with which to pay
dividends consists of dividends from the Bank.
Accordingly, the Company's ability to pay dividends
will depend largely on its receipt of sufficient
cash dividends from the Bank. Under Pennsylvania
law, the Bank is generally permitted to pay
dividends out of accumulated net earnings if the
Bank's surplus would not be reduced by the payment
of such dividend. Pennsylvania law requires the Bank
to maintain surplus in an amount that is at least
equal to capital. See "Dividend Policy."
Dividends paid by the Company will be determined by
the Company's Board of Directors and will be based
upon its consolidated financial condition, results
of operations, tax considerations, economic
conditions, regulatory restrictions which affect the
payment of dividends by the Bank to the Company, and
other factors. In addition, the Company's ability to
pay dividends is subject to limitations under
Pennsylvania law, and regulations of the Board of
Governors of the Federal Reserve System (the "FRB")
that require the Company to maintain minimum levels
of capital. There can be no assurance that dividends
will be paid on Company Common Stock or that, if
paid, such dividends will not be reduced or
eliminated in the future.
Market for Common Stock The Common Stock is listed on the Nasdaq National
Market under the symbol "NWSB." As of March 31,
1998, there were 10 registered market makers in the
Company's Common Stock, 4,402 stockholders of record
(excluding the number of persons or entities holding
stock in street name through various brokerage
firms), and 46,837,755 shares outstanding.
5
<PAGE>
The Offering Pursuant to the Agreement and the Plan, Corry
Savings will merge with and into the Bank with the
Bank as the surviving institution, and the Company
will sell shares of Common Stock in the Offering to
the depositors of Corry Savings and possibly the
general public, and issue shares to the Mutual
Company. All necessary regulatory approvals have
been obtained, subject to certain conditions
including, among other things, approval of the Plan
by Corry Savings' depositors. A special meeting of
depositors for this purpose is to be held on
September 17, 1998. See "The Offering and Merger."
The Company has engaged Ryan, Beck & Co., Inc.
("Ryan Beck") to assist the Company on a best
efforts basis in selling the Common Stock in the
Offering.
The Charitable Foundation In connection with the Merger and Offering,
Northwest and Corry shall establish a charitable
foundation (the "Charitable Foundation") for the
purpose of providing charitable contributions to the
Corry, Pennsylvania community, and other market
areas served by Northwest. The initial contribution
to the Charitable Foundation shall be $500,000. See
"The Offering and Merger--The Charitable
Foundation."
Offering Priorities The Plan provides that, subject to certain maximum
and minimum purchase limitations, subscription
rights to purchase shares of Common Stock in the
Subscription Offering have been granted to (i)
Eligible Account Holders, (ii) Supplemental Eligible
Account Holders, (iii) Other Depositors, (iv)
Eligible Employees and Trustees, and (v) the Bank's
ESOP. Any shares of Common Stock for which
subscriptions have not been accepted in the
Subscription Offering will be offered for sale in a
Community Offering. In the Community Offering,
should it be conducted, unsubscribed shares would be
offered directly to the general public with a
preference to those natural persons residing in the
local community of Corry, Pennsylvania (the
boundaries of which community would be determined by
Corry Savings' Board of Trustees in its sole
discretion). Additional terms and conditions may be
established at any time prior to the closing of any
Community Offering by the Board of Directors of the
Bank and the Board of Trustees of Corry Savings. If
approved by the Department and the FDIC, any shares
of Common Stock for which subscriptions have not
been accepted in the Community Offering may be
issued to the Mutual Company. There can be no
assurance that the Company will be able to obtain
regulatory approval of such an issuance of unsold
shares to the Mutual Company.
Stock Pricing and Number The total number of shares of Common Stock to be
of Shares to be Issued offered in the Offering will be determined jointly
by the Board of Directors of the Company and the
Board of Trustees of Corry Savings, based upon the
Independent Valuation. The number of shares of
Common Stock to be offered in the Offering will be
equal to 30.5% of the quotient obtained by dividing
the Independent Valuation as updated at the
conclusion of the Offering by the Unadjusted Price
Per Share, except that such number of shares may not
be more than 15% larger than the number of shares
indicated on the cover page as being offered hereby.
See "the Offering and Merger--Stock Pricing and
Number of Shares to be Issued."
The Independent Valuation The Independent Valuation was performed by the
Independent Appraiser, a firm experienced in the
valuation and appraisal of savings institutions. The
Independent Appraiser determined that the appraised
value of Corry Savings as of April 28, 1998 ranged
from $4,632,500 to $6,267,500. The Independent
Valuation will be updated immediately prior to the
completion of the Offering.
6
<PAGE>
Such valuation, however, is not intended, and must
not be construed, as a recommendation of any kind as
to the advisability of purchasing Common Stock. THE
INDEPENDENT APPRAISER VALUED CORRY SAVINGS, BUT DID
NOT VALUE THE SHARES OF COMMON STOCK OFFERED IN THE
OFFERING. The Independent Appraiser did not
independently verify the financial statements and
other information provided by Corry Savings, nor did
the Independent Appraiser value independently the
assets or liabilities of Corry Savings, the Bank or
the Company. 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 shares in the Offering will
thereafter be able to sell such shares at prices at
or above the price at which they purchased such
shares.
Purchase Limitations The minimum amount of Common Stock for which any
person may subscribe in the Subscription Offering or
in the Community Offering, respectively, is $500. No
person, directly or indirectly or with an associate
or a group acting in concert, may subscribe for or
purchase in the aggregate more than 5% of the total
number of shares of Common Stock offered in the
Offering, or $95,579 of Common Stock based on the
maximum of the Valuation Range. Such stock may be
purchased at a 10% discount (i.e., for $86,021) by
Eligible Account Holders. The maximum purchase
limitation may be decreased below 5% or increased to
9.9%; provided, that orders for Common Stock
exceeding 5% of the shares being offered shall not
exceed in the aggregate 10% of the total offering.
Requests to purchase additional shares of the Common
Stock in the event that the purchase limitation is
so increased will be determined by the Company and
Corry Savings in their sole discretion. See "The
Offering and Merger--Purchase Limitations."
Expiration Date for the The Subscription Offering will expire at 10:00 a.m.
Offering on September 15, 1998, unless extended for up to 45
days or such additional periods by the Company with
the approval of the Department and, if necessary,
the FDIC (as extended, the "Expiration Date").
Subscription rights which have not been exercised
prior to the Expiration Date will become void.
Orders will not be executed until all shares of
Common Stock have been subscribed for or otherwise
sold. If all shares have not been issued by the
Expiration Date unless such period is extended, all
funds will be returned promptly to the subscribers
with interest and all withdrawal authorizations will
be canceled. If an extension is granted, subscribers
will be notified of the extension of time and of any
rights of subscribers to modify or rescind their
subscriptions.
Community Offering Any shares of Common Stock for which subscriptions
have not been accepted in the Subscription Offering
will be offered for sale in a Community Offering. In
the Community Offering, should it be conducted,
unsubscribed shares would be offered directly to the
general public with a preference to those natural
persons residing in the local community of Corry,
Pennsylvania (the boundaries of which community
would be determined by Corry Savings' Board of
Trustees in its sole discretion). Additional terms
and conditions may be established at any time prior
to the closing of any Community Offering by the
Board of Directors of the Bank and the Board of
Trustees of Corry Savings. The Community Offering,
if any, shall be for a period of not more than 45
days unless extended by the Company and Corry
Savings, and shall commence concurrently with,
during or promptly after the Subscription Offering.
The opportunity to subscribe for shares of
7
<PAGE>
Common Stock in the Community Offering category is
subject to the right of the Company and Corry
Savings, in their sole discretion, to accept or
reject any such orders in whole or in part either at
the time of receipt of an order or as soon as
practicable following the Expiration Date.
Procedure for Purchasing To purchase shares in the Subscription and
Shares in Subscription Community Offering, an executed order form
and Community Offering with the required payment for the total dollar
amount of Common Stock subscribed for, or with
appropriate authorization for withdrawal from a
Corry Savings' deposit account (which may be given
by completing the appropriate blanks in the order
form), must be received by Corry Savings at its
office by 10:00 a.m., local 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 appropriate withdrawal
instructions) are not required to be accepted. In
addition, an order submitted on photocopied or
facsimile order forms will not be accepted. The
Company has the right to waive or permit the
correction of incomplete or improperly executed
forms, but does not represent it will do so. Once
received, an executed order form may not be
modified, amended or rescinded without the consent
of the Company unless the Offering has not been
completed by October 30, 1998, unless such period
has been extended. IN ORDER TO ENSURE THAT ELIGIBLE
ACCOUNT HOLDERS, SUPPLEMENTAL ELIGIBLE ACCOUNT
HOLDERS AND OTHER DEPOSITORS ARE PROPERLY IDENTIFIED
AS TO THEIR STOCK PURCHASE PRIORITIES, DEPOSITORS AS
OF THE ELIGIBILITY RECORD DATE, SUPPLEMENTAL
ELIGIBILITY RECORD DATE AND/OR THE VOTING RECORD
DATE MUST LIST ALL ACCOUNTS ON THE STOCK ORDER FORM
GIVING ALL NAMES IN EACH ACCOUNT AND THE ACCOUNT
NUMBER.
The subscription price per share of Common Stock for
all subscribers other than Eligible Account Holders
will be equal to the Unadjusted Price Per Share. The
subscription price per share for Eligible Account
Holders shall be equal to the Adjusted Price Per
Share (i.e., 90% of the Unadjusted Price Per Share).
Subject to the applicable purchase limitations, the
total number of shares that will be issued to a
subscriber whose subscription has been accepted will
be equal to the total dollar amount of stock for
which such subscription has been accepted divided by
the Unadjusted Price Per Share or the Adjusted Price
Per Share, as applicable. Payment for subscriptions
must accompany an order form and may be made (i) in
cash if delivered in person at the office of Corry
Savings, (ii) by check or money order, or (iii) by
authorization of withdrawal from deposit accounts
maintained with Corry Savings. Interest will be paid
on payments made by cash, check, or money order at
the Bank's passbook rate of interest from the date
payment is received until the completion or
termination of the Offering. If payment is made by
authorization of withdrawal from deposit accounts
(other than checking 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 Offering, but a
hold will be placed on such funds, thereby making
them unavailable to the depositor until completion
or termination of the Offering.
Restrictions on Transfer Prior to the completion of the Offering, persons
of Subscription Rights receiving subscription rights may not transfer
and Shares them or enter into any agreement or understanding to
transfer the legal or beneficial ownership of the
subscription rights issued under the Plan or the
shares of Common Stock to be issued upon their
exercise. Such rights may be exercised only by the
person to whom they are granted and only for his
8
<PAGE>
account. Each person exercising such subscription
rights will be required to certify that he is
purchasing shares solely for his own account and
that he has no agreement or understanding regarding
the sale or transfer of such shares. In addition,
persons may not offer or make an announcement of an
offer or intent to make an offer to purchase such
subscription rights or shares of Common Stock prior
to the completion of the Offering. The Company and
Corry Savings will pursue any and all legal and
equitable remedies in the event they become aware of
the transfer of subscription rights and will not
honor orders known by them to involve the transfer
of such rights.
Certain Federal Income It is a condition to the completion of the Offering
Tax Consequences of the and Merger that Corry Savings and the Bank receive
Merger and Offering an opinion of counsel or independent tax advisor
(the "Tax Opinion") to the effect that the Merger
will qualify as a reorganization within the meaning
of Section 368(a) of the Internal Revenue Code of
1986, as amended (the "Code") and that, accordingly,
no gain or loss will be recognized by: (a) Corry
Savings or the Bank as a result of the Offering and
Merger; (b) the Company as a result of the issuance
of subscription rights to eligible account holders
and other depositors ("Subscription Rights"), the
lapse of any Subscription Rights or the receipt of
money in exchange for the issuance of Common Stock
pursuant to the Offering.
The Tax Opinion will not express an opinion as to
the expected tax effects to Eligible Account Holders
as a result of the Offering and their ability to
purchase Common Stock at the Adjusted Price Per
Share. These tax effects may include, among other
things, the recognition of gain upon receipt or
exercise of the Subscription Rights to the extent of
their fair market value, which value may be
substantial because the Adjusted Purchase Price is
likely to be less than the fair market value of the
Common Stock purchased pursuant to the exercise of
the Subscription Rights. Participants will probably
not, however, recognize gain or loss as a result of
obtaining savings accounts in the Bank after the
Offering and their interests in a liquidation
account in exchange for their savings accounts in
Corry Savings as a mutual savings bank. See "Special
Considerations--Certain Federal Income Tax
Consequences" and "The Offering and Merger--Certain
Federal Income Tax Consequences" for a more complete
description of all anticipated material federal
income tax consequences of the Offering and Merger.
Required Regulatory The Merger and the Offering are subject to approval
Approvals and and/or nonobjection of the Department, the
Considerations FDIC and the FRB, all of which have been received,
subject to certain conditions. These approvals
and/or nonobjections do not constitute
recommendations or endorsements by the Department,
the FDIC or the FRB of any of the proposed
transactions contemplated by the Plan.
</TABLE>
9
<PAGE>
SPECIAL CONSIDERATIONS
The following special considerations, in addition to the information
presented in this Prospectus, should be considered by prospective investors in
deciding whether to purchase the Common Stock offered hereby.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The Bank and Corry Savings will receive a Tax Opinion to the effect that:
(i) the Merger qualifies as a reorganization within the meaning of Section
368(a) of the Code, and that no gain or loss will be recognized by Corry Savings
or the Bank as a result of such Merger; and (ii) no gain or loss will be
recognized by the Company as a result of (a) the issuance of Subscription Rights
to Eligible Account Holders, Supplemental Eligible Account Holders, Other
Depositors, Eligible Employees and Trustees of Corry Savings and the ESOP
(collectively, the "Depositors"), (b) the lapse of such Subscription Rights, or
(c) the receipt of money or other property, if any, in exchange for the issuance
of Common Stock pursuant to the Offering. The foregoing is a summary of the Tax
Opinion.
Assuming that the Offering qualifies as one or more reorganizations, an
Eligible Account Holder or Supplemental Eligible Account Holder should be
treated for federal income tax purposes as having exchanged his or her deposit
account(s) and ownership interest in Corry Savings for (i) deposit account(s) in
the Bank, (ii) interest(s) in the liquidation account in the Bank, (iii)
liquidation rights in the Mutual Company, which will be subordinate to any such
person's interest in the liquidation account in the Bank, and (iv) to the extent
such person actually purchases any Common Stock in the Subscription Offering in
such person's capacity as an Eligible Account Holder or Supplemental Eligible
Account Holder, rights to purchase such shares of Common Stock ("Subscription
Rights"). In addition, an Other Depositor and Eligible Employee and Trustee
purchasing in his capacity as such should be treated as having exchanged his or
her deposit account(s), if any, and ownership interest in Corry Savings, if any,
for (i) deposit account(s) in the Bank and (ii) Subscription Rights.
For tax purposes, the liquidation rights in the Mutual Company and the
Subscription Rights will be considered "boot" under Code Section 356, taxable to
the Eligible Account Holder or Supplemental Eligible Account Holder to the
extent of the fair market value of such property. In the opinion of the
Independent Appraiser, which opinion is not binding on the IRS, the liquidation
rights, which are subordinate to the interest in the liquidation account, and
the Subscription Rights issued to Supplemental Eligible Account Holders (which
are issued at the Unadjusted Price Per Share of the Common Stock sold in the
Offering) do not have any value, and thus, Eligible Account Holders and
Supplemental Eligible Account Holders will not recognize gain or loss upon the
receipt of the liquidation rights in the Mutual Company and Supplemental
Eligible Account Holders will not recognize gain or loss upon receipt of
Subscription Rights.
The Subscription Rights issued to Eligible Account Holders will provide
such persons the opportunity to purchase Common Stock at a price per share equal
to the Adjusted Purchase Price Per Share, which is 90% of the price per share
paid by subscribers other than Eligible Account Holders based on the trading
price of Common Stock. The federal income tax consequences of the receipt,
exercise and lapse of Subscription Rights which are exercisable at a discount
are uncertain, but they may be significant and could include the recognition of
gain equal to the fair market value of such Subscription Rights. Those
consequences present novel issues of tax law which are not addressed by any
direct authorities and, to the extent related authorities do exist, they appear
to be conflicting and inconclusive. Accordingly, the Tax Opinion will not
express an opinion on those issues. Eligible Account Holders, however, should
be aware of the following:
(a) Eligible Account Holders who receive and exercise Subscription Rights
may be required to recognize gain in an amount equal to the sum of: (i) the
product of (a) the number of shares of Common Stock received by the Eligible
Account Holder pursuant to the exercise of Subscription Rights, multiplied by
(b) the excess of the fair market value of a share of Common Stock on the date
such stock is purchased pursuant to the exercise of Subscription Rights (the
"Purchase Date"), over the Adjusted Price Per Share.
10
<PAGE>
(b) Eligible Account Holders who do not exercise some or all of their
Subscription Rights may also be required to recognize gain as a result of the
receipt of such rights. The amount of such gain should be equal to the product
of (i) the number of Subscription Rights received and not exercised by the
Eligible Account Holders times (ii) the excess of the fair market value of a
share of Common Stock on the date the Merger and Offering is completed over the
purchase price. However, such Eligible Account Holders should also be entitled
to offset such gain with a corresponding loss upon the lapse of such
Subscription Rights.
(c) If Eligible Account Holders are required to recognize gain as the
result of the receipt of Subscription Rights, Eligible Account Holders will be
required to report such gain for federal income tax purposes, even though
Eligible Account Holders who do not exercise all or a portion of the
Subscription Rights allocated to them should be entitled to offset all or a
portion of such gain with a corresponding loss to the extent such Subscription
Rights are not exercised.
(d) It does not appear that either the Company or Corry Savings is required
under the Federal income tax laws as now in effect to determine or notify the
Eligible Account Holders (on Form 1099 or otherwise) of the amount or character
of the gain to be reported by each Eligible Account Holder or the year in which
such gain should be reported for Federal income tax purposes.
In the opinion of the Independent Appraiser, which opinion is not binding
on the IRS, the Subscription Rights issued to Supplemental Eligible Account
Holders and Other Depositors do not have any value, based on the fact that such
rights are acquired by the recipients without cost, are nontransferable and of
short duration, and afford the recipients the right only to purchase the Common
Stock at a price equal to the Actual Purchase Price. Assuming that, for the
reasons set forth above, the Subscription Rights issued to Supplemental Eligible
Account Holders and Depositors have no value at the time issued, the
Supplemental Eligible Account Holders and Depositors will not recognize gain or
loss upon the receipt of Subscription Rights or upon the exercise of
Subscription Rights. No gain or loss will be required to be recognized by
Subscribers who acquire shares in the Community Offering.
ELIGIBLE ACCOUNT HOLDERS, TRUSTEES, OFFICERS AND EMPLOYEES OF CORRY
SAVINGS, TAX-EXEMPT PERSONS AND OTHER PERSONS WHO ARE INTERESTED IN THE MERGER,
OR THE OFFERING, ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES TO THEM OF THE MERGER AND THE OFFERING, INCLUDING TAX REPORTING
REQUIREMENTS, THE APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS, AND THE IMPLICATIONS OF ANY PROPOSED CHANGES IN THE TAX LAWS.
The foregoing is a summary of all anticipated material federal income tax
consequences of the Offering. See "The Offering and Merger; The Offering--
Certain Federal Income Tax Consequences" for a more complete description of all
anticipated material federal income tax consequences of the Offering and the
Offering.
POTENTIAL ADVERSE IMPACT OF CHANGES IN INTEREST RATES
Because the Company's primary asset consists of 100% of the outstanding
shares of the Bank's common stock, the Company's profitability depends primarily
on the profitability of the Bank. The Bank's profitability, like that of most
financial institutions, depends to a large extent upon its net interest income,
which is the difference between interest income on interest-earning assets, such
as loans and investments, and interest expense on interest-bearing liabilities,
such as deposits and other borrowings. The Bank's net interest income, for
example, could be adversely affected if changes in market interest rates
resulted in the cost of interest-bearing liabilities increasing faster than any
increase in the yield on the Bank's interest-earning assets. The Bank, like
other financial institutions, uses a methodology that measures its exposure to
interest rate risk based on its interest rate sensitivity gap. A gap is
considered positive when the amount of interest sensitive assets exceeds the
amount of interest sensitive liabilities. A gap is considered negative when the
amount of interest sensitive liabilities exceeds the amount of interest
sensitive assets. At March 31, 1998, the Bank's cumulative one-year interest
sensitivity gap (the difference, based on certain assumptions, between the
amount of interest-earning assets anticipated by the Bank to mature or reprice
within one
11
<PAGE>
year and the amount of interest-bearing liabilities anticipated by the Bank,
based on certain assumptions, to mature or reprice within one year) as a
percentage of total assets was a negative 3.0%. As a result, based upon the
methodology used by the Bank, the yield on interest-earning assets of the Bank
may adjust to changes in interest rates at a slower rate than the cost of the
Bank's interest-bearing liabilities. Consequently, the Bank's net interest
income could be adversely affected during periods of rapidly rising interest
rates. There can be no assurance, however, that the changes in the Bank's actual
net interest income will be consistent with those projected in the methodology.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations" in the accompanying 1997 Annual Report for further discussion of the
Bank's exposure to interest rate risk, as well as any shortcomings in the
methodology. Changes in interest rates also may impact the volume of mortgage
loan originations as well as the value of the Bank's investments in mortgage-
backed securities, investment securities and other interest-earning assets.
EXTENSIVE GOVERNMENTAL REGULATION OF THE FINANCIAL INSTITUTION INDUSTRY
The Bank is subject to extensive regulation by the FDIC and is periodically
examined by the FDIC to test compliance with various regulatory requirements.
Such supervision and regulation is intended primarily for the protection of
depositors and the deposit insurance fund, and not for the maximization of
shareholder value. The lending and savings activities of the Bank are also
subject to various "consumer protection" laws that impose significant liability
for noncompliance, whether intentional or not. Accordingly, the operations and
profitability of financial institutions and their holding companies are
significantly affected by legislation and the policies of the various federal
banking agencies. Since 1989, numerous legislation has been enacted that imposes
increased regulatory restrictions and obligations on the operations of financial
institutions and mandates the development of regulations designed to empower
regulators to take prompt corrective action with respect to institutions that
fall below certain capital standards.
THE POSSIBLE DECLINE IN THE MARKET FOR COMMON STOCK AFTER THE OFFERING
Because the Adjusted Price Per Share may be less than the market price of
Common Stock on the date the Offering is completed, some Eligible Account
Holders may be inclined to immediately sell shares of Common Stock, purchased at
the discounted price, in order to attempt to realize any such profit. In
addition, it is possible that the receipt, exercise, or lapse of subscription
rights may result in tax liability for certain Eligible Account Holders. In
such case, Eligible Account Holders may also be inclined to sell Common Stock to
realize sufficient cash to pay the tax liability resulting therefrom. Any such
sales, depending on the volume and timing, could cause the market price of
Common Stock to decline. Purchasers should consider these possibilities in
determining whether to purchase Common Stock and, the timing of any sale of
Common Stock. The Common Stock is quoted on the Nasdaq National Market. See
"Market Information" and "The Offering and Merger--Stock Pricing and Number of
Shares to be Issued," "--The Independent Valuation" and "--Certain Federal
Income Tax Consequences."
INABILITY TO RESELL THE COMMON STOCK UNTIL THE ISSUANCE AND RECEIPT OF
CERTIFICATES
Except for shares issued to a person who is deemed an affiliate of Corry
Savings or the Company for purposes of Rule 145 under the 1933 Act, the Common
Stock purchased in the Offering will be freely transferable under the 1933 Act.
However, until certificates for Common Stock are delivered to purchasers,
purchasers may not be able to sell the shares of Common Stock for which they
subscribe. Accordingly, during such period subscribers will bear the risk of
any decline in the market price in the Common Stock. The Company intends to
mail the certificates representing Common Stock issued in the Offering promptly
following completion of the Offering. See "The Offering and Merger--Procedure
for Purchasing Shares in Subscription and Community Offering."
THE HIGHLY COMPETITIVE ENVIRONMENT IN WHICH THE COMPANY OPERATES
The Bank faces significant competition in its market area both in
attracting deposits and in originating loans. The Bank faces direct competition
from a significant number of financial institutions, as well as other providers
of financial services, operating in its market area, many with a state-wide or
regional presence, and, in some cases, a
12
<PAGE>
national presence. This competition arises from commercial banks, savings
institutions, mortgage banking companies, credit unions, brokerage firms, mutual
funds and other providers of financial services, many of which are significantly
larger than the Bank, and therefore have greater financial and marketing
resources than those of the Bank.
ANTITAKEOVER PROVISIONS AND THE MUTUAL HOLDING COMPANY STRUCTURE
Because the Mutual Company is required by Pennsylvania law to own a
majority of the outstanding shares of Common Stock for so long as the Mutual
Company remains in existence, an acquisition of the Company could generally not
be consummated without the approval of the Mutual Company, the Trustees of which
are also the Directors of the Company. In addition, regulatory authorities are
unlikely to approve an acquisition of the Company by another institution while
the Bank and the Company are in the mutual holding company structure. Moreover,
the Certificate of Incorporation and the Bylaws of the Bank and the Company
include certain provisions which may be considered to be antitakeover in nature
because they may have the effect of discouraging or making more difficult the
acquisition of control of the Bank by means of an unsolicited tender or exchange
offer, proxy contest or similar transaction. See "Certain Antitakeover
Provisions."
BEST EFFORTS OFFERING WITH NO REQUIRED MINIMUM NUMBER OF SHARES
The Bank and the Company have engaged Ryan Beck as a financial and
marketing advisor, and Ryan Beck has agreed to use its best efforts to solicit
subscriptions and purchase orders for Common Stock in the Offering. Ryan Beck
has not prepared any report or opinion constituting a recommendation or advice
to the Company, nor has it prepared an opinion as to the fairness of the terms
of the Offering. Ryan Beck expresses no opinion as to the price at which Common
Stock to be issued in the Offering may trade. Furthermore, Ryan Beck has not
verified the accuracy or completeness of the information contained in this
Prospectus. See "The Reorganization and Offering--Plan of Distribution and
Selling Commissions."
The minimum dollar amount of Common Stock that must be sold in the Offering
is $1,412,912, based on the Unadjusted Price Per Share, unless the Company
obtains Department and FDIC approval of an offering of a lesser dollar amount of
Common Stock. If the Company obtains regulatory approval of an offering of a
lesser dollar amount of Common Stock, then the remaining unsold Common Stock
will be issued to the Mutual Company, which will not pay cash consideration to
the Company for such shares. There can be no assurance that the Company will be
able to obtain regulatory approval of such an issuance of unsold shares to the
Mutual Company. In addition, because the number of shares to be issued in the
Offering is based on the Unadjusted Price Per Share, which cannot be determined
until the consummation of the Offering, the Company has not established a
required minimum number of shares that must be sold in order to complete the
Offering. See "The Offering and Merger--Description of Sales Activity" and "--
Stock Pricing and Number of Shares to be Issued."
CAPABILITY OF THE BANK'S DATA PROCESSING TO ACCOMMODATE THE YEAR 2000
Like many financial institutions, the Bank relies upon computers for
the daily conduct of its business and for data processing generally. There is
concern that on January 1, 2000 computers will be unable to "read" the new year
and as a consequence, there may be widespread computer malfunctions. Management
has initiated a comprehensive program to evaluate the Company's computer systems
and applications to determine if they will continue to operate properly in the
year 2000. The Company is utilizing both internal and external resources to
identify, implement and test for year 2000 compliance. The Company has
purchased new core application hardware and software that is year 2000 compliant
and the conversion to this new system is scheduled to be completed by the end of
calendar year 1998. Management believes that with the scheduled modifications to
existing systems and the conversion to new core software, the year 2000 issue
has been properly addressed, however, there can be no assurance in this regard.
13
<PAGE>
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
SELECTED FINANCIAL AND OTHER DATA
Set forth below are selected consolidated financial and other data of the
Company. For additional information about the Company, please refer to
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements of the Bank and related
notes included in the 1997 Annual Report that accompanies this Prospectus.
Because the Company had insignificant assets and operations until completion of
the Two-Tier Reorganization on February 17, 1998, information as of and for
periods ending prior to such time is presented for the Bank.
<TABLE>
<CAPTION>
At
March 31, At June 30,
---------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ----------- ---------- ----------
SELECTED CONSOLIDATED FINANCIAL
CONDITION DATA:
<S> <C> <C> <C> <C> <C> <C>
Total assets............... $2,409,564 $2,091,363 $1,877,925 $1,591,894 $1,430,284 $1,292,488
Interest-bearing deposits
at other financial
institutions.............. 17,926 57,765 30,498 59,930 85,705 38,699
Investment securities
held-to-maturity.......... 77,070 43,419 54,086 65,470 33,180 2,699
Investment securities
available for sale........ 128,948 78,684 51,961 1,414 -- --
Mortgage-backed securities
held-to-maturity.......... 105,392 110,561 101,932 204,841 199,165 166,631
Mortgage-backed securities
available for sale........ 203,477 181,036 189,514 38,343 200 31,436
Loans receivable net:
Real estate............... 1,319,975 1,156,160 1,066,887 906,276 864,448 819,098
Consumer.................. 346,982 306,228 249,051 202,630 179,765 163,036
Commercial................ 105,533 74,110 59,017 55,829 18,320 17,127
Total loans receivable,
net.................... 1,772,490 1,536,498 1,374,955 1,164,735 1,062,533 999,261
Deposits................... 1,985,003 1,640,815 1,450,047 1,283,935 1,235,401 1,136,116
Advances from FHLB and
other borrowed funds...... 182,424 223,458 211,761 103,439 71,203 53,637
Shareholders' equity and
retained earnings (1)..... 213,259 198,494 190,651 178,690 102,319 84,251
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended Years Ended June 30,
March 31, --------------------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- ------- --------
SELECTED CONSOLIDATED (In Thousands, Except per Share Data)
OPERATING DATA:
<S> <C> <C> <C> <C> <C> <C> <C>
Total interest income...... $127,207 $112,746 $153,518 $135,130 $118,158 $106,492 $106,204
Total interest expense..... 69,064 59,931 81,424 68,637 58,126 51,256 55,888
-------- -------- -------- -------- -------- ------- --------
Net interest income..... 58,143 52,815 72,094 66,493 60,032 55,236 50,316
Provision for loan losses.. 2,382 1,185 2,491 1,502 1,098 1,728 1,797
-------- -------- -------- -------- -------- ------- --------
Net interest income
after provision for
loan losses............ 55,761 51,630 69,603 64,991 58,934 53,508 48,519
-------- -------- -------- -------- -------- ------- --------
Noninterest income......... 5,669 5,239 6,736 4,125 4,512 7,811 8,180
Noninterest expense........ 36,363 42,238 54,203 40,827 36,971 34,130 33,898
-------- -------- -------- -------- -------- ------- --------
Income before income tax
expense and
cumulative effect of
accounting change........ 25,067 14,631 22,136 28,289 26,475 27,189 22,801
Income tax expense......... 9,570 6,003 8,472 10,803 10,181 11,191 8,753
-------- -------- -------- -------- -------- ------- --------
Income before cumulative
effect of accounting
change.................... 15,497 8,628 13,664 17,486 16,294 15,998 14,048
Cumulative effect of
change in accounting for
income taxes.............. -- -- -- -- -- 2,070 --
-------- -------- -------- -------- -------- ------- --------
Net income............. $ 15,497 $ 8,628 $ 13,664 $ 17,486 $ 16,294 $18,068 $ 14,048
======== ======== ======== ========== ======== ======= ========
Basic earnings per share
(2)(3).................... $ 0.33 $ 0.19 $ 0.30 $ 0.39 $ 0.24 NA NA
======== ======== ======== ========== ==========
Diluted earnings per share
(2)(3).................... $ 0.33 $ 0.19 $ 0.30 $ 0.39 $ 0.24 NA NA
======== ======== ======== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
At or for the
Nine Months
Ended At or for the Year Ended June 30,
March 31, ------------------------------------------------------------
1998 1997 1996 1995 1994 1993
-------- -------- ---------- ---------- ---------- ----------
KEY FINANCIAL RATIOS AND
OTHER DATA: (4)
<S> <C> <C> <C> <C> <C> <C>
Return on average assets(2)........ .94% .70% 1.05% 1.09% 1.35% 1.12%
Return on average equity(2)........ 10.09 7.12 9.48 11.00 19.25 18.29
Average capital to average
assets............................. 9.36 9.84 11.03 9.87 6.93 6.11
Capital to total assets............ 8.85 9.49 10.15 11.22 7.15 6.52
Net interest rate spread........... 3.38 3.53 3.72 3.81 4.00 3.96
Net interest margin................ 3.70 3.87 4.15 4.15 4.22 4.15
Noninterest expense to
average assets..................... 2.22 2.78 2.44 2.46 2.52 2.70
Net interest income to
noninterest expenses(2)............ 1.60x 1.33x 1.63x 1.62x 1.62x 1.48x
Nonperforming loans to net
loans receivable................... .73 .68 .69 .89 1.33 1.72
Nonperforming assets to
total assets....................... .69 .72 .81 1.03 1.53 2.42
Allowance for loan losses
to nonperforming loans............. 115.86 130.50 138.49 113.52 79.40 64.18
Allowance for loan losses
to net loans receivable............ .84 .89 .95 1.02 1.06 1.10
Average interest-bearing
assets to average
interest-bearing
liabilities........................ 1.07x 1.08x 1.10x 1.08x 1.06x 1.04x
Number of:
Full-service offices............... 71 57 54 45 45 38
Consumer finance offices........... 32 30 29 28 26 26
Mortgage loan production
offices............................ 5 7 8 8 6 5
- -------------------------
</TABLE>
Footnotes on following page
14
<PAGE>
Footnotes from preceding page
(1) Reflects net proceeds of $67 million from the Bank's public offering which
was completed on November 4, 1994.
(2) For the fiscal year ended June 30, 1997, basic and diluted earnings per
share, return on average assets, return on average equity, and net interest
income to noninterest expense would have been $.41, .96%, 9.80%, and 1.58x,
respectively, without the one-time charge of $8.6 million (or $5.1 million,
after adjustment for taxes) to recapitalize the Savings Association
Insurance Fund.
(3) Basic and diluted earnings per share for the fiscal year ended June 30, 1995
reflects only earnings for the period subsequent to the Bank's minority
stock offering on November 4, 1994.
(4) Information is annualized where appropriate.
NORTHWEST BANCORP, INC.
The Company is a Pennsylvania corporation that was formed to become the
stock holding company of the Bank in a transaction (the "Two-Tier
Reorganization") that was approved by the Bank's stockholders on December 10,
1997, and completed on February 17, 1998. In the Two-Tier Reorganization, each
share of the Bank's common stock was converted into and became a share of Common
Stock of the Company, and the Bank became a wholly-owned subsidiary of the
Company. The Mutual Company and stockholders other than the Mutual Company,
which owned approximately 70% and 30%, respectively, of the Bank's outstanding
shares of common stock immediately prior to completion of the Two-Tier
Reorganization, became the owners of the same percentage of the outstanding
shares of Common Stock of the Company immediately following the completion of
the Two-Tier Reorganization. As of the date hereof, the sole activity of the
Company is the ownership of all of the issued and outstanding common stock of
the Bank and the ownership of approximately 65% of the outstanding shares of
common stock of Jamestown Savings Bank.
At March 31, 1998, the Company had total assets of $2.41 billion, total
deposits of $1.99 billion and shareholders equity of $213.3 million. As of
March 31, 1998, the Company, through its Bank and Jamestown Savings Bank
subsidiaries, operated 68 community banking offices throughout its market area
in northwest, southwest and central Pennsylvania and three community banking
offices in Southern New York. The Company, through its Bank subsidiary, also
operated one mortgage lending office in Pennsylvania, two in New York and two in
South Carolina, and 31 consumer lending offices throughout Pennsylvania and one
consumer lending office in New York. The Company has focused its lending
activities primarily on the origination of loans secured by first mortgages on
owner-occupied, one- to four-family residences. At March 31, 1998, $1.185
billion, or 66.8%, of the Company's total loans receivable were collateralized
by one- to four-family residential real estate. The Company also emphasizes the
origination of consumer loans, including home equity, second mortgage, education
and other consumer loans. At March 31, 1998, such loans totaled $347.0 million,
or 19.6%, of the Company's total loans receivable. To a lesser extent the
Company also originates multifamily residential and commercial real estate
loans, which totaled $134.7 million, or 7.6%, of the Company's total loans
receivable at March 31, 1998, and commercial business loans, which totaled
$105.5 million, or 6.0%, of the Company's total loans receivable.
The Company also invests in mortgage-backed securities issued or guaranteed
by the United States Government or agencies thereof, which totaled $308.9
million, or 12.8%, of total assets at March 31, 1998. As part of the Company's
current strategy of maintaining high levels of liquidity, the Company invests a
portion of its assets in various types of investment securities, cash and cash
equivalents including deposits in other financial institutions. These
investments totaled $223.9 million, or 9.3% of total assets, at March 31, 1998.
The Company's principal sources of funds are deposits, borrowed funds and
the principal and interest payments on loans. The principal source of income is
interest received from loans, mortgage-backed securities and investment
securities. The Bank's principal expenses are the interest paid on deposits and
the cost of employee compensation and benefits.
The Company's principal executive office is located at Liberty and Second
Streets, Warren, Pennsylvania, and its telephone number at that address is (814)
726-2140.
15
<PAGE>
USE OF PROCEEDS
Although the actual net proceeds from the sale of the Common Stock cannot
be determined until the Offering is completed, it is presently anticipated that
the net proceeds will be between $654,000 and $1.1 million, assuming that: (i)
all of the Common Stock offered in the Offering is purchased by Eligible Account
Holders at the Adjusted Price Per Share; and (ii) a number of shares of Common
Stock equal to 3% of the Common Stock sold in the Offering is purchased by the
Bank's Recognition and Retention Plan for awards to employees, that such open
market purchases are funded with gross proceeds from the Offering, and that the
purchase price is equal to the Unadjusted Purchase Price Per Share. The net
proceeds of the Offering will be initially invested in federal funds and
investment grade, short-term marketable securities, or used for general
corporate purposes.
The following table demonstrates the estimated net proceeds of the
Offering.
<TABLE>
<CAPTION>
Valuation Valuation Valuation
Minimum Midpoint Maximum
---------- ---------- ----------
<S> <C> <C> <C>
Appraised value of Corry Savings (1)............. $4,632,500 $5,450,000 $6,267,500
Value of Common Stock contributed
to the Mutual Company for benefit of
Corry Savings' depositors (2)................. 3,219,588 3,787,750 4,355,913
---------- ---------- ----------
Gross proceeds from sale of Common Stock......... 1,412,912 1,662,250 1,911,588
Merger and Offering expenses..................... 250,000 250,000 250,000
Charitable contribution, net of tax benefit (1).. 325,000 325,000 325,000
Eligible Account Holder discount (3)............. 141,291 166,225 191,159
Restricted Stock issued to Corry management
and trustees (4)............................. 42,387 49,868 57,348
---------- ---------- ----------
Estimated net proceeds (5)............... $ 654,234 $ 871,157 $1,088,081
========== ========== ==========
- ---------------------------
</TABLE>
(1) The Appraisal was prepared based on the assumption that Corry Savings would
make a charitable contribution of $500,000 prior to the completion of the
Offering and Merger. Offering proceeds have been reduced by the amount of
the charitable contribution, net of tax benefit. See "The Offering and
Merger-The Charitable Foundation."
(2) Assumes that 69.5% of the Common Stock issued in the Merger is issued to the
Mutual Company.
(3) Assumes that all shares issued in the Offering are purchased by Eligible
Account Holders at the Adjusted Price Per Share.
(4) Assumes that a number of shares equal to 3% of the shares sold in the
Offering are purchased by Northwest's Recognition and Retention Plan for
awards to Corry employees, such open market purchases are funded with
Offering proceeds, and the price paid is equal to the Unadjusted Price Per
Share. Alternatively, such shares could be issued out of the Company's
authorized but unissued shares of Common Stock, which would result in an
increase in pro forma Offering proceeds as presented. See "The Offering and
Merger--Interests of Certain Persons in the Offering."
(5) Assumes that no shares are purchased in the Offering by the ESOP. If the
ESOP purchases 7% of the shares issued in the Offering, estimated net
proceeds at the minimum, midpoint and maximum of the Valuation Range would
be would be reduced by $98,904, $116,358, and $133,811, respectively.
MARKET INFORMATION
The Common Stock is listed on the Nasdaq National Market under the symbol
"NWSB." As of March 31, 1998, the Company had 10 registered market makers,
4,402 stockholders of record (excluding the number of persons or entities
holding stock in street name through various brokerage firms), and 46,837,755
shares outstanding (as
16
<PAGE>
adjusted). The following table sets forth market price and dividend information
for the Common Stock or, prior to the completion of the Two-Tier Reorganization,
the Bank's common stock. Information is presented for each quarter of the
previous two calendar years. All information has been revised to reflect the
Bank's May 22, 1996 and November 20, 1997 two-for-one stock splits.
<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW DIVIDENDS
------------- ---- --- ---------
<S> <C> <C> <C>
1996
----
March 31 $ 6 3/8 $ 5 9/16 $.0375
June 30 $ 6 1/4 $ 5 9/16 $.04
September 30 $ 6 1/8 $ 5 3/8 $.04
December 31 $ 6 7/8 $ 5 15/16 $.04
1997
----
March 31 $ 7 7/8 $ 7 1/8 $.04
June 30 $ 7 7/8 $ 7 1/8 $.04
September 30 $ 13 5/8 $ 11 $.04
December 31 $ 16 3/8 $ 13 5/8 $.04
1998
----
March 31 $ 17 3/16 $ 13 $.04
June 30 $ 16 1/4 $ 14 5/8 $.04
</TABLE>
The last trade of the Common Stock on August 12, 1998 was at a price of $12
1/2 per share.
DIVIDEND POLICY
GENERAL
The Bank, or, since the Two-Tier Reorganization, the Company, has paid cash
dividends every quarter since the completion of its mutual holding company
reorganization and minority stock issuance in November 1994, and it is the
current policy of the Company to pay a quarterly cash dividend of $.04 per
share. As of the date hereof the Company's primary asset is common stock of the
Bank, and its principal source of income with which to pay dividends consists of
dividends from the Bank. Accordingly, the Company's ability to pay dividends
will depend largely on its receipt of sufficient cash dividends from the Bank.
Under Pennsylvania law, the Bank is generally permitted to pay dividends out of
accumulated net earnings if the Bank's surplus would not be reduced by the
payment of such dividend. Pennsylvania law requires the Bank to maintain
surplus in an amount that is at least equal to capital.
Dividends paid by the Company will be determined by the Company's Board of
Directors and will be based upon its consolidated financial condition, results
of operations, tax considerations, economic conditions, regulatory restrictions
which affect the payment of dividends by the Bank to the Company, and other
factors. In addition, the Company's ability to pay dividends is subject to
limitations under Pennsylvania law, and regulations of the FRB that require the
Company to maintain minimum levels of capital. There can be no assurance that
dividends will be paid on Company Common Stock or that, if paid, such dividends
will not be reduced or eliminated in the future.
17
<PAGE>
DIVIDEND WAIVERS BY THE MUTUAL COMPANY
It is the current policy of many mutual holding companies to waive the
right to receive dividends paid by their subsidiary savings association or
savings association holding company, and in such cases dividends are paid only
to minority stockholders and not to the mutual holding company. In connection
with the FRB's approval of the Bank's formation of the Mutual Company, and the
FRB's approval of the Two-Tier Reorganization, the FRB imposed certain
conditions on the waiver by the Mutual Company of dividends paid on the Common
Stock. In particular, the Mutual Company must obtain prior FRB approval before
it may waive any dividends. The amount of any waived dividends will not be
available for payment to Minority Stockholders and will be excluded from capital
for purposes of calculating dividends payable to Minority Stockholders.
Moreover, the cumulative amount of waived dividends must be maintained in a
restricted capital account which would be added to any liquidation account of
the Bank, and would not be available for distribution to Minority Stockholders.
The restricted capital account and liquidation account amounts would not be
reflected in the Bank's or the Company's financial statements or the notes
thereto, but would be considered as a notational or memorandum account of the
Bank, and would be maintained in accordance with the rules, regulations and
policy of the Office of Thrift Supervision ("OTS") except that such rules would
be administered by the FRB, and any other rules and regulations adopted by the
FRB.
The Mutual Company's decision as to whether or not to apply to the FRB for
approval to waive a particular dividend will depend on a number of factors,
including the Mutual Company's capital needs, regulatory approvals and the
investment alternatives available to the Mutual Company as compared to those
available to the Bank and the Company. There can be no assurance (i) that the
Mutual Company will apply to the FRB for approval to waive dividends paid by the
Company, (ii) that the FRB will approve any dividend waivers by the Mutual
Company or (iii) of the terms that may be imposed by the FRB on any dividend
waiver. As of the date hereof, the FRB had not given its approval to any
waiver, and the Mutual Company had not waived any dividends.
18
<PAGE>
CAPITALIZATION
The following table presents the consolidated capitalization of the Company
at March 31, 1998 and the pro forma consolidated capitalization of the Company
at such date after giving effect to the Merger of Corry Savings into Northwest
Savings and the receipt of the estimated net proceeds from the sale of the
Common Stock offered hereby at the midpoint of the Offering Range, based on the
assumptions set forth above in "Use of Proceeds" and in the notes below.
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA PRO FORMA
CAPITALIZATION CAPITALIZATION CAPITALIZATION
HISTORICAL OF COMPANY AT OF COMPANY AT OF COMPANY AT
CAPITALIZATION MINIMUM OF MIDPOINT OF MAXIMUM OF
OF COMPANY VALUATION RANGE VALUATION RANGE VALUATION RANGE
--------------- ---------------- ---------------- ----------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Deposits and borrowed funds:
Deposits (1)................................ $1,985,003 $2,010,232 $2,010,232 $2,010,232
Borrowed funds.............................. 182,424 182,424 182,424 182,424
---------- ---------- ---------- ----------
Total deposits and borrowed funds (2)....... $2,167,427 $2,192,656 $2,192,456 $2,192,656
========== ========== ========== ==========
Capital Stock:
Common Stock, par value $.10 per share (3).. $ 4,684 4,715 4,721 4,726
Paid in capital (4)......................... 66,780 67,770 67,989 68,208
Retained earnings........................... 141,307 141,307 141,307 141,307
Net unrealized gain (loss) on securities
available for sale, net of income taxes.... 3,171 3,171 3,171 3,171
Unearned ESOP shares (2).................... (1,412) (1,412) (1,412) (1,412)
Unearned Recognition and Retention
Plan Shares (5)............................ (1,271) (1,313) (1,321) (1,328)
---------- ---------- ---------- ----------
Total stockholders' equity.................. $ 213,259 $ 214,238 $ 214,455 $ 214,672
========== ========== ========== ==========
Stockholders' equity per share (6).......... $4.55 $4.54 $4.54 $4.54
========== ========== ========== ==========
</TABLE>
_______________
(1) Does not reflect withdrawals from deposit accounts for the purchase of
Common Stock. Such withdrawals would reduce pro forma deposits by the
amount of such withdrawals.
(2) Assumes that no shares of Common Stock are purchased by the Bank's ESOP.
(3) The Company had 100,000,000 shares of common stock authorized for issuance
and 46,837,755 shares issued and outstanding as of March 31, 1998. Assumes
that the shares of Common Stock sold in the Offering and issued to the
Mutual Company are issued from authorized but unissued shares.
(4) Assumes that all of the Common Stock are purchased by Eligible Account
Holders at the Adjusted Price Per Share which is assumed to be 90% of the
last sale price of Common Stock on July 13, 1998.
(5) Assumes that a number of shares equal to 3% of the shares sold in the
Offering are purchased by Northwest's Recognition and Retention Plan for
awards to Corry employees, that such open market purchases are funded with
Offering proceeds, and that the price paid is equal to the Unadjusted Price
Per Share. See "The Offering and Merger--Interests of Certain Persons in
the Offering."
(6) Based on 46,837,755 shares outstanding as of March 31, 1998, an Unadjusted
Price Per Share equal to the last sale price on July 13, 1998, and 316,752,
372,650, and 428,547 shares issued at the minimum, midpoint and maximum of
the Valuation Range. The actual number of shares issued in the Offering and
Merger will increase or decrease if the Unadjusted Price Per Share is lower
or higher, respectively, than the last sale price on July 13, 1998.
PRO FORMA DATA
The following tables set forth selected unaudited pro forma financial data
for the Bank and/or the Company reflecting the Offering and Merger, assuming
that the Merger was accounted for using the purchase method of accounting. The
pro forma statement of income information has been prepared assuming as follows:
(i) the shares of Common Stock are issued from authorized but unissued shares at
the beginning of the period and shares sold in the Offering as well as shares
issued to the Mutual Company are included in per share amounts ; (ii) net
proceeds from the Offering are invested at 5.40% (the one year U.S. Treasury
Bill yield as of March 31, 1998; (iii) the effective tax rate of the Bank for
the year ended December 31, 1997, was 40%; (iv) the shares of Common Stock are
sold in the Offering at the mid-point of the Valuation Range; (v) total
expenses of the Offering are $250,000;
19
<PAGE>
(vi) all of the shares of Common Stock sold in the Offering are purchased by
Eligible Account Holders at the Adjusted Price Per Share; and (vii) a number of
shares of Common Stock equal to 3% of the Common Stock sold in the Offering is
purchased by the Bank's Recognition and Retention Plan for awards to employees,
such open market purchases are funded with gross proceeds from the Offering, and
the purchase price is equal to the Unadjusted Price Per Share. No assurance can
be given that the Offering and Merger will be completed on the terms and
conditions described herein. The information is presented for the Bank rather
than the Company because the Company has insignificant assets and operations
until completion of the Two-Tier Reorganization.
REGULATORY CAPITAL
Set forth below is a summary of the Bank's and the Company's historical
regulatory capital at March 31, 1998, and pro forma regulatory capital following
completion of the Merger and the Offering, based on the estimated net proceeds
from the sale of the Common Stock in the Offering at the midpoint of the
Valuation Range. The Bank and the Company exceed all regulatory capital
requirements on an historical and pro forma basis.
<TABLE>
<CAPTION>
BANK COMPANY BANK COMPANY
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Total stockholders' equity or GAAP capital............. $ 204,007 $ 213,258 $ 205,203 $ 214,454
Less: unrealized gain on securities available for sale. (2,720) (3,171) (2,720) (3,171)
Less: intangible assets................................ (22,077) (22,707) (22,077) (22,707)
---------- ---------- ---------- ----------
FDIC leverage capital.................................. 179,211 187,380 180,406 188,576
Plus: FDIC tier 2 capital (1).......................... 14,697 14,922 14,697 14,922
---------- ---------- ---------- ----------
Total FDIC risk-based capital.......................... $ 193,908 $ 202,302 $ 195,103 $ 203,498
========== ========== ========== ==========
FDIC quarterly average total assets for leverage ratio. $2,278,563 $2,303,416 $2,307,229 $2,332,082
========== ========== ========== ==========
FDIC net risk-weighted assets including off-balance
sheet items....................................... $1,224,575 $1,253,322 $1,238,189 $1,266,936
========== ========== ---------- ----------
FDIC leverage capital ratio............................ 7.86% 8.13% 7.82% 8.09%
Minimum requirement....................................3.00% to 5.00%(2) 3.00% to 5.00%(2) 3.00% to 5.00%(2) 3.00% to 5.00%(2)
to 5.00%(2)
FDIC risk-based capital ratio.......................... 15.83% 16.14% 15.76% 16.06%
Minimum requirement.................................... 8.00% 8.00% 8.00% 8.00%
- ---------------------------
</TABLE>
(1) Tier 2 capital consists entirely of the allowance for loan losses,
which is limited to 1.25% of total risk-weighted assets as detailed
under regulations of the FDIC.
(2) The FDIC has indicated that the most
highly rated institutions which meet certain criteria will be required
to maintain a ratio of 3.00%, and all other institutions will be
required to maintain an additional cushion of 100 to 200 basis points.
As of March 31, 1998, the Bank had not been advised of any additional
requirements in this regard.
The Bank is also subject to Pennsylvania Department of Banking
("Department") capital guidelines. Although not adopted in regulation form, the
Department utilized capital standards requiring a minimum of 6% leverage capital
and 10% risk-based capital. The components of leverage and risk-based capital
are substantially the same as those defined by the FDIC.
20
<PAGE>
PRO FORMA COMBINED CONDENSED BALANCE SHEET AS OF MARCH 31, 1998
The following unaudited pro forma combined, condensed, consolidated balance
sheet information reflects (i) the historical consolidated balance sheet of the
Company as of March 31, 1998, and (ii) the pro forma combined condensed,
consolidated balance sheet of the Company as of such date, after giving effect
to the Offering, and Merger and the estimated net proceeds from the sale of the
Common Stock in the Offering at the midpoint of the Valuation Range. The
Offering and the Merger has been reflected on the purchase accounting basis.
Such pro forma financial information does not necessarily reflect what the
actual results of the Company would be following completion of the Offering and
Merger. The information should be read in conjunction with the historical
consolidated financial statements of the Bank, including the notes thereto,
which are included in the Bank's 1997 Annual Report to Shareholders, which is
incorporated by reference in, and accompanies, this Prospectus.
<TABLE>
<CAPTION>
At March 31, 1998
----------------------------------------------------
Offering and
Purchase
The Corry Accounting Pro-Forma
Company Savings Adjustments Combined
---------- ------- ------------- ----------
Assets (In thousands)
- ------
<S> <C> <C> <C> <C>
Cash and cash equivalents.................................. $ 20,155 $ 167 $ 1,196 (1)(8) $ 21,518
Interest bearing deposits in other financial institutions.. 17,926 2,107 (748) (9) 19,285
Marketable securities available-for-sale................... 332,425 1,278 -- 333,703
Marketable securities held-to-maturity..................... 182,462 3,196 -- 185,658
Loans receivable, net of allowance for estimated losses.... 1,772,490 21,199 -- 1,793,689
Accrued interest receivable................................ 13,167 187 -- 13,354
Real estate owned, net..................................... 3,779 -- -- 3,779
Federal Home Loan Bank stock, at cost...................... 13,444 202 -- 13,646
Premise and equipment, net................................. 25,332 86 (86) 25,332
Goodwill and other intangibles............................. 22,707 -- -- 22,707
Other assets............................................... 5,677 244 -- 5,921
---------- ------- ------- ----------
Total assets.............................................. $2,409,564 $28,666 $ 362 $2,438,592
========== ======= ======= ==========
Liabilities and Shareholders' Equity
- ------------------------------------
Liabilities:
Deposits.................................................. $1,985,003 $25,229 (748) (9) 2,009,484
Borrowed funds............................................ 182,424 -- -- 182,424
Advances by borrowers for taxes and insurance............. 11,815 490 12,305
Accrued interest payable.................................. 3,405 11 -- 3,416
Negative goodwill......................................... -- -- 2,677 (2) 2,677
Other liabilities......................................... 11,598 173 -- 11,771
---------- ------- ------- ----------
Total liabilities........................................ 2,194,245 25,903 1,929 2,222,077
---------- ------- ------- ----------
Minority interest in subsidiary............................ 2,060 2,060
Shareholders' equity
- --------------------
Common stock, $.10 par value, authorized
100,000,000 shares; 46,837,755 issued
and outstanding at March 31, 1998(8)..................... 4,684 -- 37 (5) 4,721
Paid-in capital........................................... 66,780 -- 1,209 (5) 67,989
Retained earnings, substantially restricted............... 141,307 2,754(10) (2,754) (3) 141,307
Unrealized gain (loss) on securities
available-for-sale, net of income taxes.................. 3,171 9 (9) (4) 3,171
Unearned ESOP shares...................................... (1,412 -- -- (6) (1,412)
Unearned recognition and retention plan shares............ (1,271 -- (50) (7) (1,321)
---------- ------- ------- ----------
Total shareholders' equity............................... 213,259 2,763 (1,567) 214,455
---------- ------- ------- ----------
Total liabilities and shareholders' equity............... $2,409,564 $28,666 $ 362 $2,438,592
========== ======= ======= ==========
- ---------------------------
</TABLE>
(1) Represents estimated net proceeds from sale of Common Stock at the midpoint
of the Valuation Range.
(2) Represents $2,561,000 for the recording of negative goodwill.
(3) Elimination of Corry Savings' retained earnings.
(4) Elimination of Corry Savings' fair value adjustment of securities
available-for-sale, net of tax.
(5) Issuance of Common Stock in the Offering.
(6) Assumes that no shares of Common Stock are purchased by the ESOP in the
Offering.
(7) Represents unearned shares of restricted stock equal to 3% of the Offering.
See "The Offering and Merger--Interests of Certain Persons in the
Offering."
(8) Assumes as follows: the shares of Common Stock are issued from authorized
but unissued shares; the shares are sold at the mid-point of the Valuation
Range; all shares are purchased by Eligible Account Holders at the Adjusted
Price Per Share (which is based on the last trade price on July 13, 1998);
and a number of shares of Common Stock equal to 3% of the Common Stock sold
in the Offering is purchased by the Bank's Recognition and Retention Plan
for awards to employees, such open market purchases are funded with gross
proceeds from the Offering, and the purchase price is equal to the
Unadjusted Price Per Share (which is based on the last trade price on July
13, 1998).
(9) Assumes that 50% of the proceeds for the purchase of stock by Corry Savings
depositors will result from withdrawals from deposit accounts at Corry
Savings.
(10) Reflects an adjustment of $325,000 after tax, for the $500,000 contributed
by Corry Savings to the Charitable Foundation.
21
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME FOR THE YEAR ENDED JUNE 30,
1997
The following unaudited pro forma combined condensed consolidated statement
of income reflects the historical consolidated statement of income of the Bank
for the year ended June 30, 1997, and the pro forma combined condensed statement
of income of the Bank, after giving effect to the Offering and Merger. Such pro
forma financial information does not necessarily reflect what the actual results
of the Bank would be following completion of the Offering and Merger. The
information should be read in conjunction with the historical consolidated
financial statements of the Bank, including the notes thereto, which are
included in the Bank's 1997 Annual Report to Shareholders, which is incorporated
by reference in, and accompanies, this Prospectus.
<TABLE>
<CAPTION>
For the Year Ended June 30, 1997
- --------------------------------------------------------------------------------
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Offering and
Purchase
The Corry Accounting Pro-Forma
Bank Savings Adjustments Combined
---------- --------- ----------- --------
Total interest income.......................... $153,518 $ 2,226 $ 59 (1) $155,803
Total interest expense......................... 81,424 1,166 -- 82,590
-------- ------- ---- --------
Net interest income........................... 72,094 1,060 59 73,213
Provision for loan losses...................... 2,491 -- -- 2,491
-------- ------- ---- --------
Net interest income after provision for loan
losses....................................... 69,603 1,060 59 70,722
-------- ------- ---- --------
Noninterest income............................. 6,736 47 -- 6,783
Noninterest expense (4)........................ 54,203 886 (258)(2) 54,831
-------- ------- ---- --------
Income before income tax expense............... 22,136 221 317 22,674
Income tax expense............................. 8,472 73 20 (3) 8,565
-------- ------- ---- --------
Net income..................................... $ 13,664 $ 148 $ 297 $ 14,109
======== ======= ==== ========
Basic earnings per share (5)................... $.30 N/A N/A $.30
======== ========
- -------------------------
</TABLE>
(1) Reflects investment of net proceeds in one year U.S. Treasury Bills at a
rate of 5.40%.
(2) Reflects the accretion of negative goodwill over ten years and amortization
of the additional shares purchased by the Bank's Recognition and Retention
Plan over five years.
(3) Income tax effect assuming an income tax rate of 40% on: earnings on
investment of the estimated net proceeds of the Offering less the
amortization of the Recognition and Retention Plan.
(4) Figures for the Bank and Corry include the one time assessment to
recapitalize the SAIF of $8.6 million and $173,431, respectively.
(5) Based on an Unadjusted Price Per Share equal to the last sale price on July
13, 1998, and 47,210,405 pro forma shares outstanding (including 372,650
share sold in the Offering and issued to the Mutual Company) as adjusted
for the Bank's November 20, 1997 two-for-one stock split. The actual
number of shares issued in the Offering and Merger will increase or
decrease if the Unadjusted Price Per Share is lower or higher,
respectively, than the last sale price on July 13, 1998.
22
<PAGE>
PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME FOR THE NINE MONTHS ENDED MARCH
31, 1998
The following unaudited pro forma combined condensed consolidated statement
of income reflects the historical consolidated statement of income of the
Company for the nine months ended March 31, 1998, and the pro forma combined
condensed statement of income of the Company, after giving effect to the
Offering and Merger. Such pro forma financial information does not necessarily
reflect what the actual results of the Company would be following completion of
the Offering and Merger. The information should be read in conjunction with the
historical consolidated financial statements of the Bank, including the notes
thereto, which are included in the Bank's 1997 Annual Report to Shareholders,
and the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1998, which are incorporated by reference in, and accompany, this
Prospectus.
<TABLE>
<CAPTION>
For the Nine Months Ended March 31, 1998
-----------------------------------------------
(Dollars in thousands, except per share data)
Offering and
Purchase
The Corry Accounting Pro-Forma
Company Savings Adjustments Combined
-------- -------- ----------- ---------
<S> <C> <C> <C> <C>
Total interest income.......................... $127,207 $ 1,684 $ 44 (1) $128,935
Total interest expense......................... 69,064 910 -- 69,974
-------- ------- ----- --------
Net interest income........................... 58,143 774 44 58,961
Provision for loan losses...................... 2,382 -- -- 2,382
-------- ------- ----- --------
Net interest income after provision for loan
losses....................................... 55,761 774 44 56,579
-------- ------- ----- --------
Noninterest income............................. 5,669 37 -- 5,706
Noninterest expense............................ 36,363 658 (194) (2) 36,827
-------- ------- ----- --------
Income before income tax expense............... 25,067 153 238 25,458
Income tax expense............................. 9,570 49 15 (3) 9,634
-------- ------- ----- --------
Net income..................................... $ 15,497 $ 104 $ 223 $ 15,824
======== ======= ===== ========
Basic earnings per share (4)................... $.33 $.34
======== ========
- -------------------------
</TABLE>
(1) Reflects investment of net proceeds in one year U.S. Treasury Bills at a
rate of 5.4%.
(2) Reflects the accretion of negative goodwill over ten years and amortization
of the additional shares purchased by the Bank's Recognition and Retention
Plan over five years.
(3) Income tax effect assuming an income tax rate of 40% on: earnings on
investment of the estimated net proceeds of the Offering less the
amortization of the Recognition and Retention Plan.
(4) Based on an Unadjusted Price Per Share equal to the last sale price on July
13, 1998, and 47,210,405 pro forma shares outstanding (including shares
sold in the Offering and issued to the Mutual Company) as adjusted for the
Bank's November 20, 1997 two-for-one stock split. The actual number of
shares issued in the Offering and Merger will increase or decrease if the
Unadjusted Price Per Share is lower or higher, respectively, than the last
sale price on July 13, 1998.
THE OFFERING AND MERGER
THE DEPARTMENT, THE FDIC AND THE FRB HAVE APPROVED THE MERGER. SUCH
APPROVALS DO NOT CONSTITUTE RECOMMENDATIONS OR ENDORSEMENTS OF THE MERGER OR THE
OFFERING.
GENERAL
The Offering and the Merger are being conducted pursuant to the Agreement
and the Plan. The Merger has been approved by Department subject to, among
other things, approval of the Agreement by Corry Savings' depositors. A special
meeting of depositors has been called for this purpose to be held on September
17, 1998 (the
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"Special Meeting"). Copies of the Agreement and the Plan are available without
charge from the Bank by a written request addressed to the Corporate Secretary,
Liberty and Second Streets, Warren, Pennsylvania 16365, or by a telephone call
to (814) 726-2140.
In accordance with the Plan and subject to certain maximum and minimum
purchase limitations, subscription rights to purchase Common Stock have been
granted to (i) Corry Savings' Eligible Account Holders, (ii) Corry Savings'
Supplemental Eligible Account Holders, (iii) Corry Savings' Other Depositors,
(iv) Eligible Employees and Trustees, and (v) the Northwest Savings Bank ESOP.
Any shares of Common Stock for which subscriptions have not been accepted in the
Subscription Offering may, at the sole discretion of the Board of Directors of
the Bank, be issued to the Mutual Company or offered for sale in a Community
Offering. In the Community Offering, should it be conducted, unsubscribed
shares will be offered directly to the general public with a preference to those
natural persons residing in the local community of Corry, Pennsylvania (the
boundaries of which community would be determined by Corry Savings' Board of
Trustees in its sole discretion). Additional terms and conditions may be
established at any time prior to the closing of any Community Offering by the
Board of Directors of the Bank and the Board of Trustees of Corry Savings. The
Plan does not preclude the Company from conducting a future minority stock
offering, although the Company has no current intention of doing so.
THE CHARITABLE FOUNDATION
On or prior to the Effective Time, Northwest and Corry Savings shall
establish a charitable foundation (the "Charitable Foundation") for the purpose
of providing charitable contributions to the Corry, Pennsylvania community and
other market areas served by the Bank. The contribution by Corry Savings to the
Charitable Foundation shall be $500,000. The Bank, the Company or the Mutual
Company shall make additional contributions to the Charitable Foundation, and
the Charitable Foundation shall maintain a division using funds contributed or
earmarked by Corry Savings that is devoted substantially to Corry Savings'
community. In the event the Bank determines that it is not feasible or
practicable to establish the Charitable Foundation and that the alternative of
making charitable contributions directly or through the Mutual Company is
preferable, then the funds to be earmarked or contributed by Corry Savings shall
be contributed directly by Corry Savings to charities or other organizations of
its choice prior to or after the completion of the Merger. The Corry Advisory
Board, consisting of the members of the Corry Savings Board of Trustees on June
19, 1997, shall advise the foundation manager ("Foundation Manager") of the
Charitable Foundation on appropriate charities and appropriate distribution of
the annual income, and such principal as may be deemed appropriate, from the
Corry division of the Charitable Foundation.
STOCK PRICING AND NUMBER OF SHARES TO BE ISSUED
The total number of shares of Common Stock of Northwest Savings to be
issued and sold in the Offering will be determined jointly by the Board of
Directors of the Bank and the Board of Trustees of Corry Savings, based upon the
Independent Valuation. The number of shares of Common Stock to be offered in
the Offering will be equal to approximately 30.5% of the quotient obtained by
dividing the Independent Valuation as updated at the conclusion of the Offering
by the Unadjusted Price Per Share. In addition, a number of authorized but
unissued shares of Common Stock equal to 69.5% of such quotient will be issued
to the Mutual Company. Based on the $12 1/2 last sale price of the Common Stock
on August 12, 1998, at the minimum and maximum of the Valuation Range, the
Company would issue 370,600 and 501,400 shares, respectively, in the Merger. Of
such shares, 69.5%, or 257,567 and 348,473 shares, respectively, would be issued
to the Mutual Company, and 30.5%, or 113,033 and 152,927 shares, respectively,
would be sold in the Offering. The number of shares that will be issued will
depend on the Unadjusted Price Per Share, provided that the total number of
shares that may be sold in the Offering may not exceed 175,866 shares of Common
Stock.
The minimum dollar amount of Common Stock that must be sold in the Offering
is $1,412,912, based on the Unadjusted Price Per Share, unless the Company
obtains Department and FDIC approval of an offering of a lesser dollar amount of
Common Stock. If the Company obtains regulatory approval of an offering of a
lesser dollar amount of Common Stock, then the remaining unsold Common Stock
will be issued to the Mutual Company, which will not pay cash consideration to
the Company for such shares. There can be no assurance that the Company will be
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able to obtain regulatory approval of such an issuance of unsold shares to the
Mutual Company. In addition, because the number of shares to be issued in the
Offering is based on the Unadjusted Price Per Share, which cannot be determined
until the consummation of the Offering, the Company has not established a
required minimum number of shares that must be sold in order to complete the
Offering.
In order to purchase Common Stock each purchaser must complete and submit
an Order Form indicating the total dollar amount of Common Stock for which he is
subscribing. The subscription price per share of Common Stock for all
subscribers other than Eligible Account Holders will be equal to the Unadjusted
Price Per Share. The subscription price per share for Eligible Account Holders
shall be equal to the Adjusted Price Per Share (i.e., 90% of the Unadjusted
Price Per Share). Subject to the applicable purchase limitations, the total
number of shares that will be issued to a subscriber whose subscription has been
accepted will be equal to the total dollar amount of stock for which such
subscription has been accepted divided by the Unadjusted Price Per Share or the
Adjusted Price Per Share, as applicable. Payment for subscriptions must
accompany an order form and may be made (i) in cash if delivered in person at
the office of Corry Savings, (ii) by check or money order, or (iii) by
authorization of withdrawal from deposit accounts maintained with Corry Savings.
Corry Savings and Northwest reserve the right to refund subscription funds in
lieu of issuing fractional shares, or permit subscribers to elect to receive
additional whole shares in this process.
The minimum amount of Common Stock for which any person may subscribe in
the Subscription Offering or in the Community Offering, respectively, is $500.
No person, directly or indirectly or with an associate or a group acting in
concert, may subscribe for or purchase in the aggregate more than 5% of the
total number of shares of Common Stock offered in the Offering, or $95,579 of
Common Stock based on the maximum of the Valuation Range. Such stock may be
purchased at a 10% discount (i.e., for $86,021) by Eligible Account Holders.
The maximum purchase limitation may be increased or decreased at the discretion
of the Company. See "The Offering and Merger--Purchase Limitations."
THE INDEPENDENT VALUATION
The Independent Valuation was performed by the Independent Appraiser, a
firm experienced in the valuation and appraisal of savings institutions. The
Independent Appraiser is not affiliated with the Bank or Corry Savings. For its
services in preparing the Independent Valuation, the Independent Appraiser will
receive a fee of $17,000. The Independent Appraiser was hired by Corry Savings
on the basis of its reputation and proposed fees. Corry Savings has agreed to
indemnify the Independent Appraiser 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 the
Independent Appraiser's liability results from its negligence or bad faith. In
determining the Independent Valuation, the Appraiser reviewed, among other
factors, Corry Savings' audited financial statements as of and for the five
years ended June 30, 1997 and unaudited financial statements as of and for the
nine months ended March 31, 1998. The Appraiser also examined the economy in
Corry Savings' market area and the competitive environment in which it operates,
and compared its operating performance with that of selected segments of the
thrift industry and selected publicly traded thrift institutions. The
Independent Appraiser also reviewed conditions in the securities markets in
general and for thrift institution stocks in particular. Similarly, when the
Independent Appraiser updates the Independent Valuation prior to the completion
of the Offering, it intends to consider, among other things, any new
developments or changes in Corry Savings' performance, financial condition and
management policies, and conditions in the equity markets for thrift institution
stock.
On the basis of the foregoing, the Independent Appraiser determined the
Valuation Range as of April 28, 1998 to be between $4,632,500 and $6,267,500.
The Independent Valuation will be updated prior to the completion of the
Offering. Such valuation, however, is not intended, and must not be construed,
as a recommendation of any kind as to the advisability of purchasing Common
Stock. THE INDEPENDENT APPRAISER VALUED CORRY SAVINGS, BUT DID NOT VALUE THE
SHARES OF COMMON STOCK OFFERED IN THE OFFERING. The Independent Appraiser did
not independently verify the financial statements and other information provided
by Corry Savings, nor did the Independent Appraiser value independently the
assets or liabilities of Corry Savings or the Bank. Moreover, because such
valuation is necessarily based upon estimates and projections of a number of
matters, all of which are subject
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to change from time to time, no assurance can be given that persons purchasing
shares in the Offering will thereafter be able to sell such shares at prices at
or above the price at which they purchased such shares.
If the updated Independent Valuation is either more than the maximum of the
Valuation Range or less than the minimum of the Valuation Range, the Company and
Corry Savings, after consulting with the Department and the FDIC, may terminate
the Offering and return all funds promptly with interest at the Bank's passbook
rate of interest on payments made by cash, check or money order, extend or hold
a new Subscription and Community Offering, establish a new Valuation Range,
commence a resolicitation of subscribers or take such other actions as permitted
by the Department and FDIC in order to complete the Offering. In the event that
a resolicitation is commenced, unless an affirmative response is received within
a reasonable period of time, all funds will be promptly returned to investors as
described above. A resolicitation, if any, following the conclusion of the
Subscription and Community Offering would not exceed 45 days unless further
extended by the Department or FDIC for periods of up to 90 days not to extend
beyond September 17, 2000.
Notwithstanding the foregoing, no sale of Common Stock may be consummated
unless, prior to such consummation, the Independent Appraiser confirms to Corry
Savings, the Company, and the Department that, to the best knowledge of the
Independent Appraiser, nothing of a material nature has occurred that, taking
into account all relevant factors, would cause the Independent Appraiser to
conclude that the actual aggregate market value of Corry Savings as an entity
merged with and into the Bank is incompatible with its estimate of the aggregate
pro forma market value of Corry Savings as an entity merged with and into the
Bank. If such confirmation is not received, Corry Savings and the Company may
cancel, extend, reopen, or hold new Subscription and Community Offerings,
establish a new Valuation Range, or take such other action as the Department may
permit.
Copies of the appraisal report of the Independent Appraiser and the
detailed memorandum of the appraiser setting forth the method and assumptions
for such appraisal are available for inspection at the main office of Corry
Savings and the other locations specified under "Additional Information."
PURCHASE LIMITATIONS
The minimum amount of Common Stock for which any person may subscribe in
the Subscription Offering or in the Community Offering, respectively, is $500.
No person, directly or indirectly or with an associate or a group acting in
concert, may subscribe for or purchase in the aggregate more than 5% of the
total number of shares of Common Stock offered in the Offering, or $95,579 of
Common Stock based on the maximum of the Valuation Range. Such stock may be
purchased at a 10% discount (i.e., for $86,021) by Eligible Account Holders.
The maximum purchase limitation may be decreased below 5% or increased to 9.9%;
provided, that orders for Common Stock exceeding 5% of the shares being offered
shall not exceed in the aggregate 10% of the total offering. Requests to
purchase additional shares of the Common Stock in the event that the purchase
limitation is so increased will be determined by the Board of Directors of the
Bank and the Board of Trustees of Corry Savings in their sole discretion.
In the event of a decrease in the Independent Valuation, the orders of
persons who subscribed for the maximum number of shares will be reduced. In the
event of a resolicitation, subscribers will be afforded the opportunity to
increase, decrease or maintain their previously submitted order. In the event
no change from the previous order is desired, no action need be taken.
If purchasers from the general public cannot be found for an insignificant
residue of unsubscribed shares, other purchase arrangements will be made by the
Boards of Directors of the Bank and Corry Savings, if possible. Such other
purchase arrangements will be subject to the approval of the Department and may
provide for purchases by directors, officers, their associates and other persons
in excess of the limitations provided below. If such other purchase
arrangements cannot be made, the Offering will be terminated.
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SUBSCRIPTION OFFERING AND SUBSCRIPTION RIGHTS
In accordance with the Plan, rights to subscribe for the purchase of Common
Stock have been granted under the Plan to the following persons in the following
order of descending priority:
PRIORITY 1: ELIGIBLE ACCOUNT HOLDERS. Each Eligible Account Holder will
receive, without payment therefor, nontransferable subscription rights to
subscribe for in the Subscription Offering up to the greater of: 5% of the
shares of Common Stock issued in the Offering (or $95,579 of Common Stock
offered based on the maximum of the Valuation Range), which stock may be
purchased at a 10% discount (i.e., for $86,021) by Eligible Account Holders); or
one-tenth of one percent (.10%) of the total offering of shares of Common Stock;
or fifteen 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 the numerator of which is the amount of the Eligible Account Holder's
qualifying deposit and the denominator of which is the total amount of
qualifying deposits of all Eligible Account Holders, in each case on the
Eligibility Record Date, subject to the overall purchase limitations; provided
that the Company may, in its sole discretion, and without further notice to or
solicitation of subscribers or other prospective purchasers, decrease such
maximum purchase limitation to 1% of the maximum number of shares offered in the
Offering. See "--Limitations on Common Stock Purchases." If there are
insufficient shares available to satisfy all subscriptions, shares first will be
allocated so as to permit each subscribing Eligible Account Holder to purchase a
number of shares sufficient to make his total allocation equal to the lesser of
100 shares or the number of shares for which he has subscribed. Thereafter,
unallocated shares will be allocated to subscribing Eligible Account Holders
whose subscriptions remain unfilled in the proportion that the amounts of their
respective eligible deposits bear to the total amount of eligible deposits of
all subscribing Eligible Account Holders whose subscriptions remain unfilled.
To ensure proper allocation of stock, each Eligible Account Holder must list on
his subscription order form all accounts in which he has an ownership interest.
Failure to list an account could result in fewer shares being allocated than if
all accounts had been disclosed. The subscription rights of Eligible Account
Holders who are also trustees or officers of Corry Savings, or their associates,
will be subordinated to the subscription rights of other Eligible Account
Holders to the extent attributable to increased deposits in the twelve months
preceding the Eligibility Record Date.
PRIORITY 2: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. To the extent there
are sufficient shares remaining after satisfaction of subscriptions by Eligible
Account Holders, each Supplemental Eligible Account Holder shall have the
opportunity to purchase up to the greater of: 5% of the shares of Common Stock
issued in the Offering (or $95,579 of Common Stock offered based on the maximum
of the Valuation Range); or one-tenth of one percent (.10%) of the total
offering of shares of Common Stock; or fifteen times the product obtained by
multiplying the total number of shares to be issued in the Offering by a
fraction the numerator of which is the Supplemental Eligible Account Holder's
qualifying deposit and the denominator of which is the total amount of
qualifying deposits of all Supplemental Eligible Account Holders, in each case
on the Supplemental Eligibility Record Date subject to the overall purchase
limitations; provided that the Company may, in its sole discretion, and without
further notice to or solicitation of subscribers or other prospective
purchasers, decrease such maximum purchase limitation to 1% of the maximum
number of shares offered in the Offering. In the event Supplemental Eligible
Account Holders subscribe for a number of shares which, when added to the shares
subscribed for by Eligible Account Holders is in excess of the total number of
shares offered in the Offering, the subscriptions of Eligible Account Holders
will be satisfied first, and then the orders of Supplemental Eligible Account
Holders will be allocated among subscribing Supplemental Eligible Account
Holders so as to permit each subscribing Supplemental Eligible Account Holder to
purchase a number of shares sufficient to make his total allocation equal to the
lesser of 100 shares or the number of shares for which he has subscribed.
Thereafter, unallocated shares will be allocated to each subscribing
Supplemental Eligible Account Holder whose subscription remains unfilled in the
same proportion that such subscriber's qualifying deposits on the Supplemental
Eligibility Record Date bear to the total amount of qualifying deposits of all
subscribing Supplemental Eligible Account Holders whose subscriptions remain
unfilled.
PRIORITY 3: OTHER DEPOSITORS. To the extent that there are sufficient
shares remaining after satisfaction of subscriptions by Eligible Account Holders
and Supplemental Eligible Account Holders, each Other Depositor will receive,
without payment therefor, nontransferable subscription rights to subscribe for
Common Stock in the Subscription Offering up to the greater of: 5% of the
shares of Common Stock issued in the Offering (or $95,579
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of Common Stock offered based on the maximum of the Valuation Range); or one-
tenth of one percent (.10%) of the total offering of shares of Common Stock;
provided that the Company may, in its sole discretion, and without further
notice to or solicitation of subscribers or other prospective purchasers,
decrease such maximum purchase limitation to 1% of the maximum number of shares
offered in the Offering. See "--Limitations on Common Stock Purchases." In the
event the Other Depositors subscribe for a number of shares which, when added to
the shares subscribed for by Supplemental Eligible Account Holders and Eligible
Account Holders, is in excess of the total number of shares offered in the
Offering, the subscriptions of Other Depositors will be allocated among
subscribing Other Depositors based on the size of such Other Depositors orders.
PRIORITY 4: EMPLOYEES, OFFICERS AND TRUSTEES. To the extent that shares
remain available for purchase after satisfaction of all subscriptions of the
Eligible Account Holders, Supplemental Eligible Account Holders and Other
Depositors, each Eligible Employee and Trustee of Corry Savings shall have the
opportunity to purchase up to 5% of the shares of Common Stock offered in the
Offering; provided that the Company may, in its sole discretion, and without
further notice to or solicitation of subscribers or other prospective
purchasers, decrease such maximum purchase limitation to 1% of the maximum
number of shares offered in the Offering. In the event that Eligible Employees
and Trustees subscribe for a number of shares, which, when added to the shares
subscribed for by Eligible Account Holders, Supplemental Eligible Account
Holders, and Other Depositors is in excess of the total shares offered in the
Offering, the subscriptions of such persons will be allocated among Eligible
Employees and Trustees on a pro rata basis based on the size of such person's
subscription orders.
PRIORITY 5: TAX-QUALIFIED EMPLOYEE PLANS. To the extent that shares
remain available for purchase after satisfaction of all subscriptions of the
Eligible Account Holders, Supplemental Eligible Account Holders, Other
Depositors, and Eligible Employees and Trustees, the Bank's ESOP shall be given
the opportunity to purchase in the aggregate up to 7% of the Common Stock issued
in the Offering. In the event of an oversubscription in the Offering,
subscriptions for shares by the ESOP may be satisfied, in whole or in part,
through open market purchases by the ESOP subsequent to the completion of the
Offering.
EXPIRATION DATE FOR THE SUBSCRIPTION OFFERING. All subscription rights
will expire on the Expiration Date unless extended by the Company, with the
approval of the Department, if necessary, for up to an additional 45 days. Any
shares not sold in the Subscription Offering may be sold in the Community
Offering, which also is expected to terminate on September 15, 1998, but which
may terminate as late as October 30, 1998, or later if approved by regulatory
authorities. Subscriptions paid by cash, check, or money order will be placed
in a segregated account at Corry Savings and will earn interest at Northwest's
regular passbook rate of interest from the date of receipt until completion or
termination of the Offering. Payments authorized by withdrawal from deposit
accounts at Corry Savings will continue to earn interest at the contractual rate
until the Offering is completed or terminated, and such funds will be otherwise
unavailable to the depositor until such time. Orders submitted are irrevocable
until the completion of the Offering; provided that all subscribers will have
their funds returned promptly, with interest, and all withdrawal authorizations
will be canceled if the Offering is not completed by October 30, 1998, unless
such period has been extended with the approval of the Department, if necessary.
If an extension of time has been granted, all subscribers will be notified of
such extension, and of any rights to confirm, modify or rescind their
subscriptions and have their funds returned promptly with interest, and of the
time period within which each subscriber must notify Corry Savings or the
Company of his intention to confirm, modify or rescind his subscription. If an
affirmative response to any resolicitation is not received by Corry Savings or
the Company from a subscriber, the subscriber's order will be rescinded and all
funds will be returned promptly with interest. Such extensions may not go
beyond September 17, 2000.
The Company will not execute orders until all shares of Common Stock have
been subscribed for or otherwise issued. If all shares have not been subscribed
for or otherwise issued within 45 days after the Expiration Date, unless such
period is extended with the consent of the Department, all funds delivered to
the Company pursuant to the Subscription Offering will be returned promptly to
the subscribers with interest and all withdrawal authorizations will be
canceled. If an extension beyond the 45 day period following the Expiration
Date is granted, the Company will notify subscribers of the extension of time
and of any rights of subscribers to modify or rescind their subscriptions. Such
extensions may not go beyond September 17, 2000.
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PERSONS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES. The Company will make
reasonable efforts to comply with the securities laws of all states in the
United States in which persons entitled to subscribe for stock reside. However,
the Company is 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; or (ii) the Company determines that
compliance with the securities laws of such state would be impracticable for
reasons of cost or otherwise, including but not limited to a requirement that
the Company or its officers or directors, under the securities laws of such
state, register as a broker, dealer, salesman or selling agent or to register or
otherwise qualify the subscription rights or Common Stock for sale or subject
any filing with respect thereto in such state. Where the number of persons
eligible to subscribe for shares in one state is small, the Company will base
its decision as to whether or not to offer the Common Stock in such state on a
number of factors, including the size of accounts being held by account holders
in the state, the cost of registering or qualifying the shares or the need to
register the Company, its officers, directors or employees as brokers, dealers
or salesmen.
COMMUNITY OFFERING
Any shares of Common Stock for which subscriptions have not been accepted
in the Subscription Offering will be offered for sale in a Community Offering.
The Community Offering, should it be conducted, will involve an offering of
unsubscribed shares directly to the general public with a preference to those
natural persons residing in the local community of Corry, Pennsylvania, the
boundaries of which shall be determined by Corry Savings' Board of Trustees in
its sole discretion. The Community Offering, if any, shall be for a period of
not more than 45 days unless extended by the Company and Corry Savings, and
shall commence concurrently with, during or promptly after the Subscription
Offering. No person, by himself or herself, or with an associate or group of
persons acting in concert, may subscribe for or purchase more than 5% of the
shares of Common Stock offered in the Offering. Further, the Company may limit
total subscriptions in the Community Offering so as to assure that the number of
shares available for the public offering may be up to a specified percentage of
the number of shares of Common Stock. If approved by the Department and the
FDIC, any shares of Common Stock for which subscriptions have not been accepted
in the Community Offering may be issued to the Mutual Company without the
payment by the Mutual Company of cash consideration therefor. There can be no
assurance that the Company will be able to obtain regulatory approval of such an
issuance of unsold shares to the Mutual Company.
In the event of an oversubscription for shares in the Community Offering,
shares may be allocated first to cover orders of natural persons residing in the
local community of Corry, Pennsylvania, then to cover the orders of any other
Person subscribing for shares in the Community Offering so that each such person
may receive the lesser of 1,000 shares and the number of shares for which he has
subscribed, and thereafter, on a pro rata basis to such persons based on the
amount of their respective subscriptions. THE OPPORTUNITY TO SUBSCRIBE FOR
SHARES OF COMMON STOCK IN THE COMMUNITY OFFERING CATEGORY IS SUBJECT TO THE
RIGHT OF THE COMPANY AND CORRY SAVINGS, IN THEIR SOLE DISCRETION, TO ACCEPT OR
REJECT ANY SUCH ORDERS IN WHOLE OR IN PART EITHER AT THE TIME OF RECEIPT OF AN
ORDER OR AS SOON AS PRACTICABLE FOLLOWING THE EXPIRATION DATE.
If for any reason a public offering of unsubscribed shares of Common Stock
cannot be effected and shares remain unsold after the Subscription Offering and
the Community Offering, if any, and the Company is not able to issue such shares
to the Mutual Company, the Boards of Directors of the Bank and the Board of
Trustees of Corry Savings will seek to make other arrangements for the sale of
the remaining shares. Such other arrangements will be subject to the approval
of the FDIC and the Department and to compliance with applicable securities
laws.
PLAN OF DISTRIBUTION AND SELLING COMMISSIONS
Offering materials for the Offering initially have been distributed to
certain persons by mail, with additional copies made available at Corry Savings'
office and by Ryan Beck. All prospective purchasers are to send payment along
with a properly completed Order Form directly to Corry Savings, where such funds
will be held in a segregated special escrow account and not released until the
Offering is completed or terminated.
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To assist in the marketing of the Common Stock, the Company has retained
Ryan Beck, a broker-dealer registered with the National Association of
Securities Dealers, Inc. (the "NASD"). Ryan Beck will provide advisory
assistance and assist the Company in the Offering as follows: (i) in training
and educating Corry Savings' and the Company's employees regarding the mechanics
and regulatory requirements of the Offering; (ii) in conducting any
informational meetings for employees, customers and the general public; (iii) in
coordinating the selling efforts in the Corry Savings' local community; and (iv)
keeping records of all orders for Common Stock. For these services, Ryan Beck
will receive an advisory and marketing fee of $30,000. Offers and sales in the
Offering will be on a best efforts basis and, as a result, Ryan Beck is not
obligated to purchase shares of Common Stock in the Offering.
The Company also will reimburse Ryan Beck for its reasonable out-of-pocket
expenses associated with its marketing effort, including legal fees and
expenses, the estimated maximum of which are $10,000. The Company will
indemnify Ryan Beck against liabilities and expenses (including legal fees)
incurred in connection with certain claims or litigation arising out of or based
upon untrue statements or omissions contained in the offering material for the
Common Stock, including liabilities under the Securities Act of 1933.
Certain directors and executive officers of the Company, the Bank and Corry
Savings may participate in the solicitation of offers to purchase Common Stock.
Such persons will be reimbursed by the Company for their reasonable out-of-
pocket expenses, including, but not limited to, de minimis telephone and postage
expenses, incurred in connection with such solicitation. Other regular, full-
time employees of the Company, the Bank and Corry Savings may participate in the
Offering but only in ministerial capacities, providing clerical work in
effecting a sales transaction or answering questions of a potential purchaser
provided that the content of the employee's responses is limited to information
contained in the Prospectus or other offering documents, and no offers or sales
may be made by tellers or at the teller counter. All sales activity will be
conducted in a segregated or separately identifiable area of Corry Savings'
office apart from the area accessible to the general public for the purpose of
making deposits or withdrawals. Other questions of prospective purchasers will
be directed to executive officers or registered representatives. Such other
employees have been instructed not to solicit offers to purchase Common Stock or
provide advice regarding the purchase of Common Stock. The Company will rely on
Rule 3a4-1 under the Exchange Act, and sales of Common Stock will be conducted
within the requirements of Rule 3a4-1, so as to permit officers, directors and
employees to participate in the sale of Common Stock. No officer, director or
employee of the Company, the Bank or Corry Savings will be compensated in
connection with his participation by the payment of commissions or other
remuneration based either directly or indirectly on the transactions in the
Common Stock.
PROCEDURE FOR PURCHASING SHARES IN SUBSCRIPTION AND COMMUNITY OFFERING
To ensure that each purchaser receives a Prospectus at least 48 hours
before the Expiration Date in accordance with Rule 15c2-8 of the 1934 Act, no
Prospectus will be mailed any later than five days prior to such date or hand
delivered any later than two days prior to such date. Execution of an order
form will confirm receipt or delivery in accordance with Rule 15c2-8. Order
Forms will only be distributed with a Prospectus.
To purchase shares in the Subscription and Community Offering, an executed
order form with the required payment for the total amount of Common Stock
subscribed for, or with appropriate authorization for withdrawal from a Corry
Savings' deposit account (which may be given by completing the appropriate
blanks in the order form), must be received by Corry Savings by 10:00 a.m.
Pennsylvania 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
appropriate withdrawal instructions) are not required to be accepted. In
addition, Corry Savings and the Company will not accept an order submitted on
photocopied or facsimile order forms. Corry Savings and the Company have the
right to waive or permit the correction of incomplete or improperly executed
forms, but do not represent that they will do so. Once received, an executed
order form may not be modified, amended or rescinded without the consent of the
Company and Corry Savings unless the Offering has not been completed within 45
days after the end of the Subscription and Community Offering, unless such
period has been extended.
The subscription price per share of Common Stock for all subscribers other
than Eligible Account Holders will be equal to the Unadjusted Price Per Share.
The subscription price per share for Eligible Account Holders shall
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be equal to the Adjusted Price Per Share (i.e., 90% of the Unadjusted Price Per
Share). Subject to the applicable purchase limitations, the total number of
shares that will be issued to a subscriber whose subscription has been accepted
will be equal to the total dollar amount of stock for which such subscription
has been accepted divided by the Unadjusted Price Per Share or the Adjusted
Price Per Share, as applicable. Payment for subscription must accompany the
Order Form and may be made (i) in cash if delivered in person at the office of
Corry Savings, (ii) by check or money order, or (iii) by authorization of
withdrawal from deposit accounts maintained with Corry Savings. Corry Savings
and Northwest reserve the right to refund subscription funds in lieu of issuing
fractional shares, or permit subscribers to elect to receive additional whole
shares in this process.
IN ORDER TO ENSURE THAT ELIGIBLE ACCOUNT HOLDERS, SUPPLEMENTAL ELIGIBLE
ACCOUNT HOLDERS AND OTHER DEPOSITORS ARE PROPERLY IDENTIFIED AS TO THEIR STOCK
PURCHASE PRIORITIES, DEPOSITORS AS OF THE ELIGIBILITY RECORD DATE, SUPPLEMENTAL
ELIGIBILITY RECORD DATE AND/OR THE VOTING RECORD DATE MUST LIST ALL ACCOUNTS ON
THE STOCK ORDER FORM GIVING ALL NAMES IN EACH ACCOUNT AND THE ACCOUNT NUMBER.
Interest will be paid on payments made by cash, check, or money order at
the Bank's passbook rate of interest from the date payment is received until the
completion or termination of the Offering. If payment is made by authorization
of withdrawal from Corry Savings' 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 Offering, but a hold
will be placed on such funds, thereby making them unavailable to the depositor
until completion or termination of the Offering.
If a subscriber authorizes Corry Savings to withdraw the amount of the
purchase price from his deposit account (other than checking accounts), Corry
Savings will do so as of the effective date of Offering. Corry Savings 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 Corry Savings' passbook rate of interest.
A depositor interested in using his or her IRA funds to purchase Common
Stock must do so through a self-directed IRA. Since Corry Savings does not
offer such accounts, it will allow a depositor to make a trustee-to-trustee
transfer of the IRA funds to a trustee offering a self-directed IRA program
without early withdrawal penalties with the agreement that such funds will be
used to purchase the Common Stock in the Offering. There will be no early
withdrawal or IRS interest penalties for such transfers. The new trustee would
hold the Common Stock in a self-directed account in the same manner as Corry
Savings 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 Corry
Savings IRA to purchase Common Stock should contact the Stock Information Center
as soon as possible so that the necessary forms may be forwarded for execution
and returned prior to the Expiration Date.
In addition, the provisions of ERISA and Internal Revenue Service
("Service") regulations require that executive officers, directors and 10%
stockholders who use self-directed IRA funds to purchase shares of Common Stock
in the Offering, make such purchase for the exclusive benefit of the IRA
participant.
Certificates representing shares of Common Stock purchased will be mailed
to purchasers at the last address of such persons appearing on the records of
Corry Savings, or to such other address as may be specified in properly
completed order forms, as soon as practicable following consummation of the
Offering. Any certificates returned as undeliverable will be disposed of in
accordance with applicable law.
RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS AND SHARES
PRIOR TO THE COMPLETION OF THE OFFERING, THE PLAN PROHIBITS ANY PERSON WITH
SUBSCRIPTION RIGHTS FROM TRANSFERRING OR ENTERING INTO ANY AGREEMENT OR
UNDERSTANDING TO TRANSFER THE LEGAL OR BENEFICIAL OWNERSHIP OF THE SUBSCRIPTION
RIGHTS ISSUED UNDER THE PLAN OR THE SHARES OF COMMON STOCK TO BE ISSUED UPON
THEIR EXERCISE. SUCH RIGHTS MAY BE EXERCISED ONLY BY THE PERSON TO WHOM THEY ARE
GRANTED AND ONLY FOR HIS ACCOUNT. EACH
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PERSON EXERCISING SUCH SUBSCRIPTION RIGHTS WILL BE REQUIRED TO CERTIFY THAT HE
IS PURCHASING SHARES SOLELY FOR HIS OWN ACCOUNT AND THAT HE HAS NO AGREEMENT OR
UNDERSTANDING REGARDING THE SALE OR TRANSFER OF SUCH SHARES. THE PLAN ALSO
PROHIBITS ANY PERSON FROM OFFERING OR MAKING AN ANNOUNCEMENT OF AN OFFER OR
INTENT TO MAKE AN OFFER TO PURCHASE SUCH SUBSCRIPTION RIGHTS OR SHARES OF COMMON
STOCK PRIOR TO THE COMPLETION OF THE OFFERING.
CORRY SAVINGS AND THE BANK WILL PURSUE ANY AND ALL LEGAL AND EQUITABLE
REMEDIES IN THE EVENT THEY BECOME AWARE OF THE TRANSFER OF SUBSCRIPTION RIGHTS
AND WILL NOT HONOR ORDERS KNOWN BY THEM TO INVOLVE THE TRANSFER OF SUCH RIGHTS.
LIMITATIONS ON COMMON STOCK PURCHASES
The Plan includes the following limitations on the number of shares of
Common Stock which may be purchased during the Offering:
1. No person may purchase fewer than the number of shares of Common Stock
having an aggregate purchase price of $500;
2. The aggregate amount of outstanding common stock of the Bank owned or
controlled by persons other than Mutual Company at the close of the
Offering shall be less than 50% of the Bank's total outstanding common
stock.
3. No person, associate thereof, or group of persons acting in concert,
may purchase more than 5% of the shares of Common Stock sold, except that:
(i) the ESOP may purchase in the aggregate up to 7% of the shares of Common
Stock; and (ii) for purposes of this limitation shares to be held by any
tax-qualified employee plan and attributable to a person shall not be
aggregated with other shares purchased directly by or otherwise
attributable to such person.
4. The aggregate amount of Common Stock that may be acquired in the
Offering by officers and directors of Corry Savings and any person acting
in concert with such persons, exclusive of any stock acquired by such
persons in the open market, shall not exceed 35% of the shares of Common
Stock, provided that in calculating the number of shares held by officers
and directors of Corry Savings and any person acting in concert with such
persons under this paragraph shares held by any tax-qualified employee plan
of the Bank that are attributable to such persons shall not be counted.
5. Subject to any required regulatory approval and the requirements of
applicable laws and regulations, the Board of Directors of the Bank after
consulting with the Board of Trustees of Corry may, in its sole discretion,
increase the maximum purchase limitation to up to 9.9%, provided that
orders for Common Stock in excess of 5% of the number of shares of Common
Stock shall not in the aggregate exceed 10% of the total shares of Common
Stock (except that this limitation shall not apply to purchases by tax-
qualified employee Plans). If such 5% limitation is increased, subscribers
for the maximum amount will be, and certain other large subscribers in the
sole discretion of the Bank and Corry Savings may be, given the opportunity
to increase their subscriptions up to the then applicable limit. Requests
to purchase additional shares of Common Stock under this provision will be
determined by the Board of Directors of the Bank, in its sole discretion.
6. No person shall be entitled to purchase any Common Stock to the extent
such purchase would be illegal under any federal law or state law or
regulation or would violate regulations or policies of the National
Association of Securities Dealers, Inc. The Bank and/or its agents, in the
Bank's sole discretion, may require that a prospective subscriber provide a
legal opinion as to the legality of his proposed purchase and may refuse to
honor any purchase order if such opinion is not timely furnished or is
otherwise unacceptable to the Bank, in its sole discretion.
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7. The Board of Directors of the Bank has the right in its sole discretion
to reject any order submitted by a person whose representations the Board
of Directors believes to be false or who it otherwise believes, either
alone or acting in concert with others, is violating, circumventing, or
intends to violate, evade or circumvent the terms and conditions of the
Plan.
The Board of Directors of the Bank shall have the authority to interpret
terms used in the above limitations and terms used in the Plan in their sole
discretion.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of all anticipated material federal income tax
consequences of the Offering and the possible purchase of Common Stock in the
Subscription Offering or the Community Offering. The summary is based on the
federal income tax laws as now in effect and as currently interpreted; it does
not take into account possible changes in such laws or interpretations,
including amendments to applicable statutes or regulations or changes in
judicial or administrative rulings, some of which may have retroactive effect.
In addition, to the extent the discussion is premised upon the receipt of an
opinion of legal counsel, purchasers should be aware that any such opinion will
not be binding on the IRS or the courts. The summary does not purport to
address all aspects of the possible federal income tax consequences of the
Offering. In particular, and without limiting the foregoing, this summary does
not address the federal income tax consequences of the Offering to Eligible
Account Holders in light of their particular circumstances or status (e.g.,
foreign persons tax-exempt entities, etc.), nor does this summary address any
consequences of the Offering under any state, local, or foreign tax laws.
SUBSCRIBERS ARE THEREFORE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
SPECIFIC TAX CONSEQUENCES TO THEM OF THE PROPOSED TRANSACTIONS AND ANY PURCHASE
OF COMMON STOCK PURSUANT TO THE SUBSCRIPTION OFFERING OR THE COMMUNITY OFFERING,
INCLUDING TAX RETURN REPORTING REQUIREMENTS, THE APPLICATION AND EFFECT OF
FEDERAL, FOREIGN, STATE, LOCAL AND OTHER TAX LAWS, AND THE IMPLICATIONS OF ANY
PROPOSED CHANGES IN THE TAX LAWS.
The tax consequences of the purchase of Common Stock may vary depending on
whether the purchase is by an Eligible Account Holder in his capacity as such.
All Eligible Account Holders should read carefully the entire discussion under
"Special Considerations--Certain Federal Income Tax Consequences" before
deciding whether to purchase Common Stock in such person's capacity as an
Eligible Account Holder.
Reorganization Status. The consummation of the Offering is conditioned
upon the receipt by the Bank of an opinion of counsel or independent tax advisor
to the effect that, based on facts and representations made by the Bank, the
Offering will constitute one or more reorganizations within the meaning of
Section 368(a) of the Code.
Certain Tax Consequences of the Proposed Transactions to Subscribers.
Assuming that the Offering qualifies as one or more reorganizations, an Eligible
Account Holder or Supplemental Eligible Account Holder should be treated for
federal income tax purposes as having exchanged his or her deposit account(s)
and depositorship interest in Corry Savings for (i) deposit account(s) in
Northwest Savings, (ii) interest(s) in the liquidation account in Northwest
Savings, (iii) liquidation rights in the Mutual Company, which will be
subordinate to a depositor's interest in the liquidation account in the Bank,
and (iv) to the extent such person actually purchases any Common Stock in the
Subscription Offering in such person's capacity as an Eligible Account Holder or
Supplemental Eligible Account Holder, rights to purchase such shares of Common
Stock ("Subscription Rights"). In addition, an Other Depositor and Eligible
Employee and Trustee purchasing in his capacity as such should be treated as
having exchanged his or her deposit account(s), if any, and depositorship
interest in Corry Savings, if any, for (i) deposit account(s) in the Bank and
(ii) Subscription Rights.
The federal income tax consequences of the receipt, exercise and lapse of
Subscription Rights which are exercisable at a discount are uncertain, but they
may be significant and could include the recognition of gain equal to the fair
market value of such Subscription Rights. Those consequences present novel
issues of tax law which are
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not addressed by any direct authorities and, to the extent related authorities
do exist, they appear to be conflicting and inconclusive. Set forth below are
two possible tax consequences of the receipt and/or exercise of Subscription
Rights.
Under one scenario, only those Eligible Account Holders who actually
exercise Subscription Rights should recognize gain as a result of the exchanges
described in the preceding paragraph and the amount of such gain should be equal
to the fair market value of the Subscription Rights exercised. As a result,
Eligible Account Holders who do not exercise Subscription Rights should not
recognize gain for federal income tax purposes as a result of the Offering. The
determination of the fair market value of the Subscription Rights will depend on
a number of factors, including the excess, if any, of the market price of the
Common Stock over the Adjusted Purchase Price, the period of time during which
the Subscription Rights will be outstanding and exercisable, the
nontransferability of the Subscription Rights, and perhaps other factors. For
purposes of the information returns to be filed with the IRS relating to the
gain recognized by Eligible Account Holders who exercise Subscription Rights,
the Bank and Corry Savings intend to value the Subscription Rights exercised
based solely on the difference between the Adjusted Price Per Share and the
Unadjusted Price Per Share.
It is possible that, consistent with earlier private letter rulings, all
Eligible Account Holders (including those who do not exercise Subscription
Rights) will be treated as having received taxable Subscription Rights pursuant
to the Offering. Should this be the case, each Eligible Account Holder will
recognize taxable gain in an amount equal to the fair market value of the
Subscription Rights received. In addition, the IRS may take the position that
those Eligible Account Holders who actually exercise Subscription Rights have
additional income that, when added to the income recognized on the receipt of
the Subscription Rights, generally would increase their total amount of income
to approximately the amount such Eligible Account Holders would recognize as
described above. An Eligible Account Holder who does not exercise some or all
of his or her Subscription Rights should be entitled to claim, at the time the
unexercised Subscription Rights expire, a capital loss equal to the amount of
gain attributable to the Subscription Rights not exercised, provided that the
Common Stock that would have been acquired upon exercise of the expired
Subscription Rights would have constituted a capital asset in the hands of the
Eligible Account Holder. Thus, in general, an Eligible Account Holder who does
not exercise any Subscription Rights would have gain and an equal offsetting
loss as a result of the Offering. Although the capital loss should be equal in
amount to the related gain recognized, the character of the loss as a capital
loss may not be the same as the character of the gain required to be recognized
upon receipt of the unexercised Subscription Rights, certain additional tax
forms may have to be filed, and, under certain circumstances, an Eligible
Account Holder may have to use the loss in a later tax year than the year in
which the gain from receipt of the unexercised Subscription Rights is
recognized. For most Eligible Account Holders, any gain recognized on the
distribution of the Subscription Rights will be treated as a capital gain.
Based on the foregoing, if all Eligible Account Holders are treated as
having received Subscription Rights, then all Eligible Account Holders, not just
those who exercise Subscription Rights, will have to be concerned about the
value assigned to the Subscription Rights, and other questions, such as when and
how many Subscription Rights should be deemed to be received by each Eligible
Account Holder. There is no authority that clearly resolves these questions
and, in the absence of such authority, there may be several possible approaches
for determining the time at which Subscription Rights would, under these
circumstances, be deemed to be received by Eligible Account Holders.
In the opinion of the Independent Appraiser, which opinion is not binding
on the IRS, the Subscription Rights issued to Supplemental Eligible Account
Holders, Other Depositors and Corry Officers do not have any value, based on the
fact that such rights are acquired by the recipients without cost, are
nontransferable and of short duration, and afford the recipients the right only
to purchase the Common Stock at a price equal to the Unadjusted Price Per Share.
Assuming that, for the reasons set forth above, the Subscription Rights issued
to Supplemental Eligible Account Holders, Other Depositors and Corry Officers
have no value at the time issued, the Supplemental Eligible Account Holders,
Other Depositors and Corry Officers will not recognize gain or loss upon the
receipt of Subscription Rights or upon the exercise of Subscription Rights.
Exercise of Subscription Rights. An Eligible Account Holder (i) should not
recognize any taxable income as a result of the purchase of Common Stock
pursuant to the exercise of Subscription Rights (although as noted above
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such an Eligible Account Holder will be required to recognize taxable gain as a
result of the receipt of exercised Subscription Rights at the Adjusted Price Per
Share), (ii) should have a basis in such Common Stock equal to the purchase
price paid therefor increased by the basis, if any, of the Subscription Rights
exercised (such an Eligible Account Holder's basis in the Subscription Rights
should be equal to the amount of gain (and any additional income) recognized on
the receipt (and exercise) of Subscription Rights), and (iii) should have a
holding period in the Common Stock purchased pursuant to the exercise of
Subscription Rights commencing on the date the Subscription Rights are
exercised, which should be the Closing Date.
Purchase of Common Stock by a Purchaser in His or Her Capacity as Other
than an Eligible Account Holder. No income, gain or loss should be recognized by
Supplemental Eligible Account Holders, Other Depositors, Eligible Employees and
Trusts, or purchasers in the Community Offering, either as a result of having
the opportunity to purchase shares of Common Stock in the Offering or as a
result of the purchase of Common Stock in the Offering. Supplemental Eligible
Account Holders, Other Depositors, Eligible Employees and Trusts, or purchasers
in the Community Offering who purchase Common Stock in the Offering should have
a basis in such stock equal to the purchase price thereof, and should have a
holding period for such stock commencing on the day following the day on which
the stock is purchased, which should be the day after the closing date. A
purchaser of shares of Common Stock in the Offering may have a tax basis in such
shares that is less than the tax basis that an Eligible Account Holder purchaser
in the Subscription Offering might have.
Individual Retirement Accounts. Those persons who are beneficial owners of
IRA, Keogh or similar retirement accounts are not themselves Eligible Account
Holders by virtue of having such accounts, but the account itself may be an
Eligible Account Holder. Thus, the tax consequences of the receipt and exercise
of Subscription Rights should be applicable to the IRAs and Keogh accounts
themselves, and not the beneficial owners thereof. So long as such accounts are
tax-exempt, under Section 408 of the Code (in the case of IRAs) or Section
501(a) of the Code (in the case of Keogh accounts), there should be no federal
income tax consequences to the accounts resulting from receipt of Subscription
Rights. In the case of an IRA, Keogh or similar retirement account established
at Corry Savings, or the Bank, however, in order to subscribe for shares in the
Offering, the beneficial owner first must authorize and direct such institution
to transfer the account to a self-directed account at an independent trustee
that permits the account to hold stock. Payment for the Common Stock under
these circumstances should have no federal income tax consequences to the IRA or
Keogh account or to the beneficial owner of such account. To the extent that
the balance in an IRA or Keogh account is increased as a result of the exercise
of Subscription Rights, additional income generally would be recognized upon the
future withdrawal of such account balance.
CERTAIN PENNSYLVANIA INCOME TAX CONSEQUENCES OF THE OFFERING
For Pennsylvania income tax purposes, the tax consequences of the Offering
and the possible purchase by Eligible Account Holders of Common Stock pursuant
to the Subscription Offering or the Community Offering are expected to be
substantially similar to the federal income tax consequences.
REQUIRED REGULATORY APPROVALS AND CONSIDERATIONS AS TO THE MERGER AND OFFERING
The Offering is subject to the receipt of a notice of non-objection from
the FDIC pursuant to 12 C.F.R. (S)303.15. The Company has received a
representation from the FDIC of its intention, subject to certain conditions, to
issue such letter of non-objection. The merger of Corry Savings into the Bank
is also subject to approval of the Department under Pennsylvania law and
regulations, and the FDIC pursuant to the Bank Merger Act. The Company has
received both such approvals. The Bank Merger Act requires that the FDIC take
into consideration the financial and managerial resources and future prospects
of the existing and proposed institutions and the convenience and needs of the
communities to be served. Further, the FDIC may not approve the merger if it
would result in a monopoly or if it would be in furtherance of any combination
or conspiracy to monopolize or to attempt to monopolize the business of banking
in any part of the United States, or if its effect in any section of the country
may be substantially to lessen competition or to tend to create a monopoly, or
if it would be in any other manner in restraint of trade, unless the FDIC finds
that the anticompetitive effects of the merger are clearly outweighed in the
public interest by the probable effect of the transaction in meeting the
convenience and needs of the communities to be served. In addition, the FDIC
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must take into account the record of performance of the existing and proposed
institutions under the Community Reinvestment Act in meeting the credit needs of
the entire community, including low- and moderate-income neighborhoods, served
by such institutions. Applicable regulations also require publication of notice
of the application for approval of the merger and provide an opportunity for the
public to comment on the application in writing and to request a hearing. The
Bank Merger Act requires that any bank merger, including the merger of Corry
Savings into the Bank, may not be consummated until the 15th day after approval
under the Bank Merger Act, during which time the United States Department of
Justice may challenge the merger on antitrust grounds.
In addition, as a condition to their approvals of the Two-Tier
Reorganization applications, the FDIC, the FRB and the Department required that
any future stock issuances by the Company be approved by such agencies. The
Company has received all such required approvals.
The approvals described above do not constitute a recommendation or
endorsement by the FDIC, the FRB or the Department of any of the proposed
transactions contemplated by the Plan.
ACCOUNTING TREATMENT
The Offering and Merger will be accounted for on a purchase accounting
basis in accordance with generally accepted accounting principles. Under
purchase accounting, the assets and liabilities of Corry Savings as of the
Closing Date will be recorded at their respective fair values, and added to
those of the Bank. Any excess of the fair market value of the assets of Corry
Savings over the "purchase price" (i.e., the value of the stock issued to the
Mutual Company) will be recorded as negative goodwill. The consolidated
financial statements of the Company issued after consummation of the Merger and
Offering will reflect these items.
TIME LIMITS ON COMPLETION OF THE OFFERING
Applicable regulations governing mutual to stock conversion offerings
require that the sale of the Common Stock offered in connection with the
Offering be completed within 45 calendar days after the expiration of the
Subscription Offering. In the event the sale of the Common Stock cannot be
completed within the required 45-day period, one or more extensions of time to
complete the sale of the Common Stock may be granted by the Department prior to
the end of such 45-day period, but no single extension of time may exceed 90
days. No assurance can be given that an extension will be granted if requested.
The Subscription Offering is scheduled to expire at 10:00 a.m., Pennsylvania
time, on September 15, 1998. Thus, unless extended by Corry Savings and the
Bank with the approval of the Department, such sale must be completed by October
30, 1998.
The Company will not issue the shares of Common Stock until all such shares
(other than an insignificant residue) have been subscribed for or arrangements
made to issue such shares to the Mutual Company. If this has not occurred
within 45 days after the expiration of the Subscription Offering, unless such
period is extended with the consent of the Department, all funds delivered to
Corry Savings in the Subscription Offering and the Community Offering will be
returned promptly to those who subscribed in the Subscription Offering and the
Community Offering with interest, and all withdrawal authorizations will be
canceled. If an extension beyond the 45-day period following the expiration of
the Subscription Offering is granted, Corry Savings will notify those who
subscribed in the Subscription Offering and the Community Offering of the
extension of time and of their rights, if any, to modify or rescind their
subscriptions. No sales of shares may be completed, either in the Subscription
Offering or the Community Offering, or otherwise, unless the Plan is approved by
the depositors of Corry Savings.
EFFECT OF THE PROPOSED TRANSACTIONS ON ACCOUNT HOLDERS AND BORROWERS
The Merger and the Offering will not change the amount or withdrawal rights
of savings deposits. Thus, depositors will continue to hold their existing
certificates, passbooks and other evidences of their accounts. In addition,
such accounts will continue to be insured by the FDIC up to the maximum amount
authorized by federal law; however, persons who have deposit accounts at both
the Bank and Corry Savings prior to the Offering will retain separate insurance
coverage in those accounts only for a period of six months from the date of the
closing of the
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Merger as if the institutions remained as separate entities, except in the case
of certificate of deposit accounts that will mature more than six months
thereafter--in which event separate insurance coverage will continue until the
earliest maturity date. Thereafter, such separate insurance coverage will cease
and those depositors' accounts will be insured up to the maximum amount
permitted under federal law. Depositors whose insurance coverage is affected by
the Merger will be notified in advance of any reduction in deposit insurance
taking effect. The principal amount, interest rate, maturity date and other
terms of Corry Savings' loans will continue under the same contractual terms as
those prior to completion of the Merger.
VOTING RIGHTS
At present, neither holders of withdrawable accounts nor borrowers at Corry
Savings have voting rights in Corry Savings, except that the Plan requires the
affirmative vote of a majority of depositors in connection with the Offering and
Merger. Subsequent to the Merger, each person who has purchased Common Stock in
the Offering or otherwise, as a holder of shares of Common Stock, will have
exclusive rights to vote on any matters to be considered by the holders of
Common Stock. A shareholder is entitled to one vote for each share of Common
Stock owned (however, the Certificate of Incorporation of the Company provides
that in no event shall any record owner of any outstanding Common Stock which is
beneficially owned, directly or indirectly, by a person who beneficially owns in
excess of 10% of the then outstanding shares of Common Stock (the "Limit") be
entitled or permitted to any vote in respect of the shares held in excess of the
Limit).
LIQUIDATION RIGHTS
Currently, in the unlikely event of liquidation of Corry Savings, any
assets remaining after satisfaction of all creditors' claims in full (including
the claims of all depositors to the withdrawal value of their accounts) would be
distributed pro rata among the depositors of Corry Savings, with the pro rata
share of each being the same proportion of all such remaining assets as the
withdrawal value of each depositor's account is to the total withdrawal value of
all accounts in Corry Savings at the time of the liquidation.
Upon consummation of the Merger, the Bank intends to increase the
liquidation account that it currently maintains or establish a new liquidation
account (in either case, the "Liquidation Account"), for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders. The Liquidation
Account will initially be established on the Bank's books in an amount equal to
Corry Savings' net worth as of March 31, 1998. Each Eligible Account Holder and
Supplemental Eligible Account Holder will receive an initial interest in the
Liquidation Account (subaccount balance) which will be in the same proportion to
the total Liquidation Account as the balance of the deposit at Corry Savings of
each Eligible Account Holder and Supplemental Eligible Account Holder on the
Eligibility Record Date and Supplemental Eligibility Record Date, respectively,
was to the total of the deposits of all Eligible Account Holders and
Supplemental Eligibility Record Date, respectively. Neither the total amount of
the Liquidation Account nor an Eligible Account Holder's or Supplemental
Eligible Account Holder's subaccount balance in the Liquidation Account will
ever increase. The Liquidation Account will be maintained as an off-balance
sheet "memorandum" account. The Bank may not pay any dividend that would reduce
its equity to an amount that is less than the amount of the Liquidation Account.
In addition, to the extent that Eligible Account Holders and Supplemental
Eligible Account Holders are depositors of the Bank they will obtain liquidation
rights in the Mutual Company on the same terms as other depositors of the Bank.
However, any liquidation rights of Eligible Account Holders and Supplemental
Eligible Account Holders in the Mutual Company may only be realized if, and to
the extent that, such person's interest in the Liquidation Account of the Bank
cannot be fully realized.
If the amount on deposit at the Bank by any Eligible Account Holder or
Supplemental Eligible Account Holder on any annual audit year closing date after
the consummation of the Merger is less than the amount on deposit on the
Eligibility Record Date or Supplemental Eligibility Record Date, respectively,
or any subsequent annual audit year closing date, his subaccount balance in the
Liquidation Account will be reduced by an amount proportionate to the reduction
in the related deposit at the Bank and will not thereafter be increased despite
any subsequent increase
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in the related deposit. In the unlikely event of liquidation of the Bank, the
Bank's assets would first be applied against the claims of all creditors
(including the claims of all depositors to the withdrawal value of their
accounts). Any remaining assets would then be distributed pro rata to the
persons who maintain an interest in the Bank's liquidation account in an amount
equal to their subaccount balance before any distribution may be made to any
holder of the Common Stock.
CERTAIN RESTRICTIONS ON PURCHASE OR TRANSFER OF SHARES AFTER OFFERING
All shares of Common Stock purchased in connection with the Offering by a
director or an executive officer of Corry Savings will be subject to a
restriction that the shares not be sold for a period of one year following the
Offering, except in the event of the death of such director or executive
officer. Each certificate for restricted shares will bear a legend giving
notice of this restriction on transfer, and instructions will be issued to the
effect that any transfer within such time period of any certificate or record
ownership of such shares other than as provided above is a violation of the
restriction. Any shares of Common Stock issued at a later date as a stock
dividend, stock split, or otherwise, with respect to such restricted stock will
be subject to the same restrictions.
INTERESTS OF CERTAIN PERSONS IN THE OFFERING
The Bank intends to offer continued employment to all employees of Corry
Savings as of the Effective Time at the salary levels in effect at the Effective
Time. Employees of Corry Savings who continue employment with the Bank
("Continuing Employees") shall be eligible to participate in such employee
benefit plans as may be in effect generally for employees of the Bank (the "the
Bank Plans"). Continuing Employees shall generally be entitled to participate
on the same basis as similarly situated employees of the Bank, except that
Continuing Employees shall generally be entitled to full credit for each full
year of service with Corry Savings for purposes of determining eligibility for
participation and vesting, but not for benefit accruals
The officers and trustees of Corry Savings will be permitted to participate
in the Northwest Savings Bank and Northwest Bancorp, MHC Recognition and
Retention Plan (the "Restricted Stock Plan"), and the Northwest Savings Bank and
the Northwest Bancorp, MHC Stock Option Plan (the "Option Plan"). The Board of
Trustees of Corry Savings shall designate officers and trustees who shall
receive in the aggregate (i) a number of shares of Common Stock, restricted by
the terms of the Restricted Stock Plan, equal to 3% of the number of shares of
Common Stock sold in the Offering, and (ii) pursuant to the Option Plan options
to purchase a number of shares of the Common Stock equal to 10% of the number of
shares of Common Stock sold in the Offering, at an exercise price equal to the
fair market value of the Common Stock at the time the options are awarded. If
sufficient shares or options to satisfy the awards set forth above under (i) and
(ii) are not then available under such plans, the Bank intends to amend such
plans, or to adopt an additional restricted stock plan and stock option plan, to
permit such awards to be made. Any additional restricted stock or stock option
plans shall be established in accordance with rules and policy of the Department
and the FDIC. In addition, the Bank's ESOP or other tax qualified employee plans
intend to subscribe for 7% of the shares of Common Stock sold in the Offering
and Continuing Employees shall not be entitled to credit for prior service with
Corry Savings for any purpose but shall be eligible for participation in the
tax-qualified employee plans on the same basis as new employees of the Bank.
Participation by Continuing Employees in employee benefit plans of the Bank with
respect to which eligibility and participation is at the discretion of the
employer shall be discretionary with such employer.
The Bank will honor the written employment agreement of Vicki L. Stec. Any
other full-time employee of Corry Savings as of the Effective Time who is
terminated by the Bank within one year following the completion of the Merger
without cause (as defined in the Agreement), except in the case of voluntary
resignation, disability or death, shall be entitled to severance benefits equal
to one week's salary for each year of service to Corry Savings as of the date of
termination, up to a maximum of 18 weeks.
Each member of the Board of Trustees of Corry as of the date of the
Agreement is entitled to serve on an Advisory Board to the Board of Directors of
the Bank. The non-employee Advisory Directors shall receive an annual
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<PAGE>
fee no less than the annual fee paid to such persons as trustees of Corry as of
the date of the Agreement. The Advisory Board will meet monthly.
THE AGREEMENT
General. The Bank and Corry Savings are parties to the Agreement, dated as
of June 19, 1997, pursuant to which Corry Savings will merge with and into the
Bank with the Bank as the surviving institution. The Agreement contains certain
agreements between the Bank and Corry Savings relating to the Merger and
Offering, and certain related provisions.
Indemnification. The Agreement provides that all rights to indemnification
existing at the time of the Agreement in favor of the trustees, officers,
employees and agents of Corry Savings as provided under applicable law or in its
charter, bylaws, indemnification agreements or otherwise with respect to matters
occurring prior to the Effective Time shall survive the Merger and continue in
full force and effect until the applicable statute of limitations has expired.
Thereafter, such persons shall be indemnified to the extent permitted by the
Bank's charter and bylaws. In the event of any claim or litigation giving rise
to such indemnification, the Agreement provides that the Bank will provide the
indemnified party with reasonable access to all documents and other information
relating to the subject matter of the litigation and will reasonably cooperate
in the defense of such litigation. An employee, agent, trustee or officer of
Corry Savings seeking indemnification pursuant to the provisions of Corry
Savings' articles of incorporation or bylaws shall be entitled to have the
resolution of any dispute regarding the right to and the extent of the
indemnification, including the right to the advancement of or the reimbursement
of legal fees and expenses related to such claim or litigation, resolved by an
arbitrator selected by the Bank and the indemnified party.
Termination. The Agreement may be terminated and the Merger abandoned at
any time before the Closing Date, whether before or after the approval or
adoption of the Agreement by the depositors of Corry:
(a) By mutual written consent of the Board of Directors of the Bank and
Board of Trustees of Corry;
(b) By the written notice from the Bank to Corry if: (i) any condition to
the Bank's obligations becomes impossible to substantially satisfy at any time
or has not been substantially satisfied or waived in writing; or (ii) any
condition to the obligations of the Bank and Corry Savings becomes impossible to
substantially satisfy at any time or has not been substantially satisfied or
waived in writing, provided, however, the Bank shall not have the right to
terminate the Agreement pursuant to this clause if any required governmental
approval was not received due to the failure of the Bank to perform or observe
the covenants and agreements set forth in the Agreement; or (iii) any Corry
Savings' warranty or representation shall be untrue or incorrect in any material
respect and such breach has not been cured within 30 days following receipt by
Corry Savings of written notice of such discovery; (iv) Corry Savings shall
have breached one or more provisions of the Agreement in any material respect
and such breach has not been cured within 30 days following receipt by Corry
Savings of written notice of such breach; or
(c) By written notice from Corry Savings to the Bank, which has been
approved by the Board of Trustees of Corry, if: (i) any condition to Corry
Savings obligations becomes impossible to substantially satisfy and has not been
substantially satisfied or waived in writing; or (ii) any condition to the
obligations of the Bank or Corry becomes impossible to substantially satisfy at
any time or has not been substantially satisfied or waived in writing, provided,
however, Corry shall not have the right to terminate this Agreement pursuant to
this clause if any required governmental approval was not received due to the
failure of Corry Savings to perform or observe the covenants and agreements set
forth in the Agreement; or (iii) any of the Bank's warranties or
representations shall be untrue or incorrect in any material respect and such
breach has not been cured within 30 days following receipt by Northwest of
written notice of such discovery; or (iv) the Bank shall have breached one or
more provisions of the Agreement in any material respect and such breach has not
been cured within 30 days following receipt by the Bank of written notice of
such breach.
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<PAGE>
(d) By the Board of Directors of the Bank if the Board of Trustees of Corry
shall not recommend, or shall withdraw or modify in a manner adverse to the
Bank, its recommendation to Corry Savings' depositors to approve the Agreement.
(e) By the Board of Directors of the Bank or Board of Trustees of Corry at
any time if the depositors of Corry Savings have not approved the Agreement by
the requisite affirmative vote.
(f) By the Board of Directors of the Bank or Board of Trustees of Corry if
the Merger has not been consummated on or before March 31, 1998.
In the event of termination of the Agreement by either Corry Savings or the
Bank, the Agreement shall become void, and there shall be no liability or
obligation on the part of the Bank or Corry or their respective officers,
trustees or directors except with respect, generally, to provisions relating to
confidentiality and expenses.
Expenses. The Agreement provides that all expenses incurred by the Bank
and Corry in connection with or related to the authorization, preparation and
execution of the Agreement, the solicitation of any required depositor approvals
and all other matters related to the closing of the transactions contemplated
thereby, including all fees and expenses of agents, representatives, counsel and
accountants employed by either such party or its affiliates, shall be borne
solely and entirely by the party that has incurred the same. If the Offering is
completed all expenses will be netted against the proceeds of the Offering.
INDEMNIFICATION OF THE COMPANY'S OFFICERS AND DIRECTORS
AND LIMITATION OF LIABILITY
General. Certain provisions of the Company's Articles of Incorporation
seek to ensure that directors are able to exercise their best business judgment
in managing corporate affairs, subject to their continuing fiduciary duties, and
are not unreasonably impeded by exposure to the potentially high personal costs
or other uncertainties of litigation. The nature of the responsibilities of
directors and officers often requires them to make difficult decisions which can
expose such persons to personal liability, but from which they will acquire no
personal benefit (other than as stockholders). In recent years, litigation
against corporations and their directors and officers, often amounting to mere
"second guessing" of good-faith judgments and involving no allegations of
personal wrongdoing, has become common. Such litigation often claims damages in
large amounts which bear no relationship to the amount of compensation received
by the directors or officers, particularly in the case of directors who are not
officers of the corporation, and the expense of defending such litigation,
regardless of whether it is well founded, can be enormous. Individual directors
and officers can seldom bear either the legal defense costs involved or the risk
of a large judgment.
In order to attract and retain competent and conscientious directors and
officers in the face of these potentially serious risks, corporations have
historically provided for corporate indemnification and limitation of liability
in their articles of incorporation or bylaws, and have obtained liability
insurance protecting the company and its directors and officers against the cost
of litigation and related expenses. Such indemnification and limitation of
liability provisions may also benefit stockholders who indirectly assume the
expense of litigation and directors and officers liability insurance. The
Company currently has insurance coverage for its directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the following provisions, the Company has been informed that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable. In addition, Federal banking
regulations restrict the Bank or the Company from indemnifying officers and
directors for civil monetary penalties or judgments resulting from
administrative or civil actions instituted by any Federal banking agency, or any
other liability or legal expense with regard to any administrative proceeding or
civil action instituted by any Federal banking agency, which results in a final
order or settlement pursuant to which such person is assessed a civil monetary
penalty, removed from office or prohibited from participating in the conduct of
the affairs of an insured depository institution, or required to cease and
desist from or take certain actions.
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<PAGE>
Limitation of Liability under the Company's Articles of Incorporation. The
Company's Articles of Incorporation provide that the personal liability of a
director or officer of the Company for monetary damages shall be eliminated to
the fullest extent permitted by the Business Corporation Law of 1988, as
amended, of the Commonwealth of Pennsylvania (the "BCL") as it exists on the
effective date of the Articles of Incorporation or as such law may be thereafter
in effect. The Articles of Incorporation also state that in no event shall a
director be personally liable for monetary damages for any action taken unless
the director has breached or failed to perform the duties of his office under
the BCL and the breach or failure to perform constitutes self-dealing, willful
misconduct or recklessness. This latter provision regarding limitation of a
director's personal liability is specifically permitted by Pennsylvania law.
These provisions may reduce the likelihood of derivative litigation against
directors and discourage or deter stockholders or management from bringing a
lawsuit against directors for breach of their duty of care, even though such an
action, if successful, might otherwise have been beneficial to the Company and
its stockholders. The provisions will not, however, affect the right to pursue
equitable remedies for breach of the duty of care, although such remedies might
not be available as a practical matter. Federal banking and securities laws may
limit the effect of such limitation of liability provisions.
Indemnification Provisions of the Company's Bylaws. The Company's Bylaws
provide that the Company shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of the Company), by reason of the fact that he is
or was a director or officer of the Company, or is or was serving at the request
of the Company as a representative of another entity, against expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
incurred by him in connection with the action or proceeding if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to, the
best interests of the Company and, with respect to any criminal proceeding, had
no reasonable cause to believe his conduct was unlawful. The Bylaws further
provide that the Company shall not be liable for any amounts which may be due to
any such person in connection with a settlement of any action or proceeding
initiated by any such person (other than an action or proceeding to enforce
rights to indemnification hereunder).
As regards derivative and corporate actions, the Company's Bylaws provide
that the Company shall indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action by
or in the right of the Company to procure a judgment in its favor by reason of
the fact that he is or was a director or officer of the Company or is or was
serving at the request of the Company as a representative of another entity,
against expenses (including attorney's fees) actually and reasonably incurred by
him in connection with the defense or settlement of the action if he acted in
good faith and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the Company. The Bylaws further provide that no
indemnification shall be made under such provisions of the Bylaws in respect of
any claim, issue or matter as to which the person has been adjudged to be liable
to the Company unless and only to the extent that the court of common pleas of
the judicial district embracing the county in which the registered office of the
Company is located or the court in which the action was brought determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, the person is fairly and reasonably entitled to
indemnity for the expenses that the court of common pleas or other court deems
proper.
Unless ordered by a court, any indemnification described above shall be
made by the Company only as authorized in the specific case upon a determination
that indemnification of the representative is proper in the circumstances
because he has met the applicable standard of conduct set forth above. The
determination shall be made: (1) by the Board of Directors by a majority vote of
a quorum consisting of directors who were not parties to the action or
proceeding; (2) if such a quorum is not obtainable, or if obtainable and a
majority vote of a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion; or (3) by the stockholders.
The Bylaws provide that expenses (including attorneys' fees) incurred in
defending any action or proceeding referred to above shall be paid by the
Company in advance of the final disposition of the action or proceeding upon
receipt of an undertaking by or on behalf of the director or officer to repay
the amount if it is ultimately determined that he is not entitled to be
indemnified by the Company.
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The duties of the Company to indemnify and to advance expenses to a
director or officer are in the nature of a contract between the Company and each
such person, and no amendment or repeal of any provision of the Bylaws may
alter, to the detriment of such person, the right of such person to the advance
of expenses or indemnification related to a claim based on an act or failure to
act which took place prior to such amendment or repeal.
CERTAIN ANTITAKEOVER PROVISIONS
Introduction. A number of provisions of the Articles of Incorporation and
Bylaws of the Company deal with matters of corporate governance and certain
rights of stockholders. The following discussion is a general summary of
certain of these provisions and certain other statutory and regulatory
provisions relating to stock ownership and transfers, and business combinations.
Some of these provisions may be deemed to have potential anti-takeover effects
in that they may have the effect of discouraging a future takeover attempt or
change of control which is not approved by the Board of Directors but which a
majority of individual stockholders may deem to be in their best interests or in
which stockholders may receive a substantial premium for their shares over then
current market prices. As a result, stockholders who desire to participate in
such a transaction may not have an opportunity to do so. Such provisions will
also render the removal of the current Board of Directors or management more
difficult.
Issuance of Capital Stock. The Articles of Incorporation of the Company
authorizes the issuance of 100,000,000 shares of Common Stock, par value $.10
per share, and 10,000,000 shares of serial preferred stock. The Company has
adopted no plan or agreement to issue additional shares of stock at this time,
other than in the Offering and upon the exercise of stock options. If
additional authorized but unissued shares of Common Stock are issued in the
future, the percentage ownership interests of existing stockholders would be
reduced and, depending on the terms pursuant to which new shares are issued, the
book value and earnings per share of outstanding Common Stock might be diluted.
Moreover, such additional share issuances could be construed as having an anti-
takeover effect. The ability to issue additional shares gives management
greater flexibility in financing corporate operations. Under Pennsylvania law,
as long as the Mutual Company is in existence it must own at least a majority of
the outstanding voting stock of the Company. Accordingly, Pennsylvania law
would not permit the Company to issue shares of voting stock if after such
issuance stockholders other than the Mutual Company would own more than a
majority of the Company's outstanding voting stock.
Special Meetings of Stockholders. The Articles of Incorporation of the
Company provide that special meetings of the stockholders of the Company may be
called only by the Board of Directors pursuant to a resolution approved by the
affirmative vote of a majority of directors then in office.
Cumulative Voting. The Company's Articles of Incorporation do not provide
for cumulative voting. The absence of cumulative voting rights means that the
holders of a majority of the shares voted at a meeting of stockholders may elect
all directors of the Company thereby precluding minority stockholder
representation on the Board of Directors.
Number and Term of Directors; Classified Board of Directors. The Company's
Bylaws provide that the Board of Directors shall consist of between 5 and 15
members, the exact number to be determined by the Board of Directors. The Board
of Directors of the Company has set the number of directors at 10 persons.
Although the Company has no present intention of reducing its number of
directors below its present number of members, the Board of Directors believes
that the ability to reduce the number of directors will result in greater
flexibility in the event of vacancies on the current Board.
The Company's Articles of Incorporation provides for a classified board of
directors, consisting of three classes of directors, each serving for a three
year term, with the term of each class of directors ending in successive years.
Directors may be removed only for cause.
Presentation of New Business at Meetings of Stockholders. The Company's
Bylaws provide that any stockholder entitled to vote generally in an election of
directors may nominate one or more persons for election as directors at a
meeting, and, if properly brought, may bring other business before an annual
meeting of the Company.
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For nominations or other business to be properly brought before an annual
meeting, written notice of such stockholder's intent must be given not later
than (i) 90 days prior to the anniversary date of the mailing of proxy materials
by the Company in connection with the immediately preceding annual meeting of
stockholders of the Company or, in the case of the first annual meeting of
stockholders of the Company following the Two-Tier Reorganization, ninety days
prior to the anniversary date of the mailing of proxy materials by the Bank in
connection with the immediately preceding annual meeting of the Bank prior to
such acquisition, and (ii) with respect to a nomination relating to an election
of directors at a special meeting of stockholders, the close of business on the
tenth day following the date on which notice of such meeting is first given to
stockholders. The Company's Bylaws specify further procedural requirements that
must be satisfied for notice to be properly given.
Mutual Company Ownership. So long as the Mutual Company is in existence,
the Mutual Company must own at least a majority of the outstanding voting stock
of the Company. The Mutual Company currently is able to elect directors and
direct the affairs and business operations of the Company.
Limitation on Voting Rights. The Articles of incorporation of the Company
provide that no person other than the Mutual Company shall directly or
indirectly offer to acquire or acquire the beneficial ownership of more than 10%
of any class of any equity security of the Company. In the event shares are
acquired in violation of this provision, all shares beneficially owned by any
person in excess of 10% shall be considered "excess shares" and shall not be
counted as shares entitled to vote and shall not be voted by any person or
counted as voting shares in connection with any matters submitted to the
stockholders for a vote.
SUBSCRIPTIONS BY MANAGEMENT AND TRUSTEES OF CORRY SAVINGS
The following table sets forth the number of shares of Common Stock for
which Corry Savings' executive officers and trustees, individually and as a
group, are expected to subscribe. The table assumes that sufficient shares will
be available to satisfy their subscriptions.
<TABLE>
<CAPTION>
Total Subscriptions
Total as a Percentage of
Amount of the Maximum of
Name Total Shares* Subscriptions the Valuation Range
- ------------------------------------ ------------------ ------------- --------------------
<S> <C> <C> <C>
Vicki L. Stec, President
and Chief Executive Officer 2,667 $30,000 *
Frederick D. Davids, Trustee 444 5,000 *
Olin C. Capwell, Trustee 889 10,000 *
William A. Nichols, Trustee 444 5,000 *
David A. Johnson, Trustee 444 5,000 *
Executive Officers and Trustees as
a group (5 persons) 4,888 55,000 1.0%
- ------------------
</TABLE>
*Total shares assumes that all shares are purchased at the Adjusted Price Per
Share, which is assumed to be $11.25 (i.e., 90% of the Northwest Savings Bank
last sale price on August 12, 1998).
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DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
GENERAL
The Company is authorized to issue capital stock consisting of 100,000,000
shares of common stock, par value $.10 per share ("Common Stock"), and
10,000,000 shares of preferred stock, which may be issued in series and classes
having such rights, preferences, privileges and restrictions as the Company's
Board of Directors may determine. Each share of Common Stock will have the same
relative rights as, and will be identical in all respects with, each other share
of Common Stock. The Board of Directors of the Company is authorized to approve
the issuance of Common Stock up to the amount authorized by the Articles of
Incorporation without the approval of the Company's stockholders. A majority of
the issued and outstanding voting stock of the Company must be held at all time
by the Mutual Company. THE COMMON STOCK REPRESENTS NONWITHDRAWABLE CAPITAL, IS
NOT AN ACCOUNT OF AN INSURABLE TYPE, AND IS NOT INSURED BY THE FDIC, THE SAIF OR
ANY OTHER GOVERNMENT AGENCY. THE COMMON STOCK IS NOT GUARANTEED BY THE COMPANY
OR THE BANK. Upon payment of the purchase price for the shares of Common Stock
issued in the Offering, all such shares will be fully-paid, duly issued and
nonassessable.
COMMON STOCK
Voting Rights. The holders of the Common Stock possess exclusive voting
rights in the Company, except to the extent that shares of serial preferred
stock issued in the future may have voting rights. Each holder of the Common
Stock is entitled to one vote for each share held, except that the Articles of
Incorporation eliminates voting rights with respect to those shares that are
beneficially owned by any person in excess of 10% of the Common Stock then
outstanding excluding the Mutual Company and tax-qualified employee benefit
plans. Stockholders will not be permitted to cumulate their votes in the
election of directors.
Dividends. The holders of the Common Stock will be entitled to receive and
to share equally in such dividends as may be declared by the Board of Directors
out of funds legally available therefor.
Liquidation. In the unlikely event of any liquidation, dissolution, or
winding up of the Company, the holders of Common Stock (and the holders of any
class or series of stock entitled to participate with the Common Stock in the
distribution of assets) will be entitled to receive all assets of the Company
available for distribution in cash or in kind after the payment of all debts and
liabilities, the satisfaction of obligations to depositors having an interest in
any liquidation account maintained by the Bank, and the payment of any accrued
dividend claims. If the Company issues preferred stock, the holders thereof may
also have priority over the holders of the Common Stock in the event of
liquidation or dissolution.
Preemptive Rights; Redemption. Holders of the Common Stock will not be
entitled to preemptive rights with respect to any additional shares which may be
issued except that under current Pennsylvania law and policy, persons who are
depositors of the Bank at the time of any subsequent stock offering may be
entitled to receive preemptive rights to purchase stock in such offering. The
Common Stock is not subject to call for redemption. If the Company determined
to issue authorized but unissued shares in the future to persons other than, or
in addition to the existing stockholders, the interests of existing stockholders
would be diluted to the extent of the additional issuance.
SERIAL PREFERRED STOCK
None of the 10,000,000 authorized shares of serial preferred stock of the
Company will be issued in the Offering. The Board of directors is authorized,
without stockholder approval, to issue serial preferred stock and to fix and
state voting powers, designations, preferences or other special rights of such
shares. If and when issued, the serial preferred stock may rank senior to the
Common Stock as to dividend rights, liquidation preferences, or both, and may
have full, limited or no voting rights. Accordingly, the issuance of preferred
stock could adversely affect the voting and other rights of holders of Common
Stock.
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<PAGE>
EXPERTS
The consolidated financial statements of the Bank and subsidiaries as of
June 30, 1997 and 1996 and for each of the years in the three year period ended
June 30, 1997, incorporated by reference herein, have been incorporated by
reference herein in reliance upon the report of KPMG Peat Marwick LLP,
Independent Certified Public Accountants, which report is incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
The Independent Appraiser has consented to the publication herein of the
summary of its report to Corry Savings setting forth its opinion as to the
estimated pro forma market value of Corry Savings as an entity merged with and
into the Bank and its opinion with respect to subscription rights.
LEGAL OPINIONS
The legality of the Common Stock will be passed upon for Corry Savings and
the Bank by Luse Lehman Gorman Pomerenk & Schick, P.C., Washington, D.C.,
special counsel to the Bank. Certain legal matters will be passed upon for Ryan
Beck by Malizia, Spidi, Sloane & Fisch, P.C., Washington, D.C. KPMG Peat
Marwick LLP, Independent Certified Public Accountants will pass upon the federal
income tax consequences of the Offering.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC are incorporated in this
Prospectus by reference:
1. The Bank's Annual Report on Form 10-K for the year ended June 30, 1997
(filed on November 4, 1997 as an exhibit to the Company's Registration
Statement on Form S-4).
2. The Bank's Annual Report to Shareholders for the fiscal year ended
June 30, 1997 (the "1997 Annual Report") (filed on November 4, 1997 as
an exhibit to the Company's Registration Statement on Form S-4).
3. The Bank's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1997 (filed on February 20, 1998 as an exhibit to the
Company's Registration Statement on Form S-8).
4. The Bank's Quarterly Report on Form 10-Q for the fiscal quarter ended
December 31, 1997 (filed on February 20, 1998 as an exhibit to the
Company's Registration Statement on Form S-8).
5. The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1997.
6. The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1997.
7. The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1998.
8. All documents filed by the Company subsequent to the date hereof
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein,
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all documents incorporated herein by reference (except exhibits
thereto). Such requests, in writing or by telephone, should be directed to:
Gregory C. LaRocca, Secretary, Northwest Bancorp, Inc., Liberty and Second
Streets, Warren, Pennsylvania, 16365-2353, (814) 726-2140.
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN AS CONTAINED IN THIS PRO-
SPECTUS 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 NORTHWEST BANCORP, INC., NORTHWEST SAVINGS BANK, OR CORRY
SAVINGS BANK. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLIC-
ITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR
IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO, OR TO ANY PERSON WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN
SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HERE-
UNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF NORTHWEST BANCORP, INC. OR NORTHWEST SAVINGS BANK
SINCE ANY OF THE DATES AS OF WHICH INFORMATION IS FURNISHED HEREIN OR SINCE
THE DATE HEREOF.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Available Information.................................................... 3
Summary.................................................................. 4
Special Considerations................................................... 10
Northwest Bancorp, Inc. and Subsidiaries Selected Financial and Other
Data.................................................................... 14
Northwest Bancorp, Inc................................................... 15
Use of Proceeds.......................................................... 16
Market Information....................................................... 16
Dividend Policy.......................................................... 17
Capitalization........................................................... 19
Pro Forma Data........................................................... 19
The Offering and Merger.................................................. 23
Indemnification of the Company's Officers and Directors and Limitation of
Liability............................................................... 40
Certain Antitakeover Provisions.......................................... 42
Subscriptions by Management and Trustees of Corry Savings................ 43
Description of Capital Stock of the Company.............................. 44
Experts.................................................................. 45
Legal Opinions........................................................... 45
Incorporation of Certain Information by Reference........................ 45
</TABLE>
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152,927 SHARES
(ANTICIPATED MAXIMUM)
NORTHWEST BANCORP, INC.
COMMON STOCK
PAR VALUE $.10 PER SHARE
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PROSPECTUS
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LOGO
AUGUST 12, 1998
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