<PAGE> 1
As filed with the Securities and Exchange Commission on July 25, 1997
Registration No.333-____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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STATEN ISLAND BANCORP, INC.
(Exact name of registrant as specified in its articles of incorporation)
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<S> <C> <C>
Delaware 6711 Being applied for
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(State or other jurisdiction of (Primary Standard (I.R.S. Employer
incorporation or organization) Industrial Classification Code Number) Identification No.)
</TABLE>
15 Beach Street
Staten Island, New York 10304
(718) 447-7900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Harry P. Doherty
Chairman of the Board and Chief Executive Officer
15 Beach Street
Staten Island, New York 10304
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Raymond A. Tiernan, Esq.
Hugh T. Wilkinson, Esq.
Kevin M. Houlihan, Esq.
Elias, Matz, Tiernan & Herrick L.L.P.
734 15th Street, N.W.
12th Floor
Washington, D.C. 20005
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ X ]
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AMOUNT
TITLE OF EACH CLASS OF TO BE PURCHASE PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock, $.01 par
value per share (1) 42,981,250 shares $10.00 $ 429,812,500 (2) $130,246.22
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Participation interests 1,518,689 shares -- -- (3)
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</TABLE>
(1) Includes shares of Common Stock to be issued to the SISB Community
Foundation, a private foundation.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) The securities of Staten Island Bancorp, Inc. to be purchased by the Staten
Island Savings Bank 401(k) Savings Plan are included in the amount shown
for Common Stock. Accordingly, no separate fee is required for the
participation interests. In accordance with Rule 457(h) of the Securities
Act, as amended, the registration fee has been calculated on the basis of
the number of shares of Common Stock that may be purchased with the current
assets of such Plan.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THE REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a)
MAY DETERMINE.
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<PAGE> 2
PROSPECTUS SUPPLEMENT
STATEN ISLAND BANCORP, INC.
COMMON STOCK, $.01 PAR VALUE PER SHARE
STATEN ISLAND SAVINGS BANK 401(k) SAVINGS PLAN
(1,518,689 SHARES AND PARTICIPATIONS THEREIN)
This Prospectus Supplement relates to the offer and sale to employees
of Staten Island Savings Bank (the "Bank" or the "Employer") who are
participants ("Participants") in the Staten Island Savings Bank 401(k) Savings
Plan in RSI Retirement Trust ("Profit Sharing Plan" or the "Plan") of up to
1,518,689 shares of Staten Island Bancorp, Inc. (the "Company") common stock,
par value $.01 per share (the "Common Stock"), and participation interests in
the Profit Sharing Plan, as set forth herein.
In connection with the reorganization of the Bank to the stock form of
organization and the formation of the Company (the "Conversion") and pursuant
to the Bank's and the Company's Plan of Conversion (the "Plan of Conversion"),
the Company and the Bank have amended the Profit Sharing Plan to provide, among
other things that Participants in the Profit Sharing Plan be able to direct the
investment of the vested portion of their account balances within the Profit
Sharing Plan into an investment fund consisting of Common Stock (the "Employer
Stock Fund"). The Profit Sharing Plan will permit Participants in the Profit
Sharing Plan to direct the trustee of the Profit Sharing Plan (the "Trustee")
to purchase Common Stock with amounts in the Profit Sharing Plan attributable
to such Participants. This Prospectus Supplement relates to the initial
election of a Participant to direct the purchase of Common Stock in the
Conversion. This Prospectus Supplement does not cover reoffers or resales of
the Common Stock. See "Restrictions on Resale."
The Prospectus dated ______________, 1997 of the Company (the
"Prospectus"), which is attached to this Prospectus Supplement, includes
detailed information with respect to the Company, the Conversion, the Common
Stock and the financial condition, results of operations, and business of the
Bank. This Prospectus Supplement, which provides detailed information with
respect to the Profit Sharing Plan, should be read only in conjunction with the
Prospectus.
For a discussion of certain factors that should be considered by each
Participant, see "Risk Factors" in the Prospectus.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT SUPERVISION OR ANY
OTHER FEDERAL OR STATE AGENCY OR STATE SECURITIES COMMISSION,
NOR HAS SUCH COMMISSION, OFFICE OR ANY STATE SECURITIES
COMMISSIONERS OR OTHER AGENCY PASSED UPON THE
ACCURACY OF THIS PROSPECTUS SUPPLEMENT.
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 OR GUARANTEED BY THE BANK INSURANCE FUND OR THE SAVINGS
ASSOCIATION INSURANCE FUND OF THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY
OTHER GOVERNMENT AGENCY AND ARE NOT GUARANTEED BY THE COMPANY OR THE BANK.
The date of this Prospectus Supplement is ___________, 1997.
<PAGE> 3
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THE PROSPECTUS OR THIS PROSPECTUS
SUPPLEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE BANK OR THE PROFIT
SHARING PLAN. THIS PROSPECTUS SUPPLEMENT DOES NOT CONSTITUTE AN OFFER TO SELL
OR SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY, THE
BANK OR THE PROFIT SHARING PLAN SINCE THE DATE HEREOF OR THAT THE INFORMATION
HEREIN CONTAINED OR INCORPORATED BY REFERENCE IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS SUPPLEMENT SHOULD BE READ ONLY
IN CONJUNCTION WITH THE PROSPECTUS THAT IS ATTACHED HERETO AND SHOULD BE
RETAINED FOR FUTURE REFERENCE.
TABLE OF CONTENTS
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PAGE
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The Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Securities Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Election to Purchase Common Stock in the Conversion . . . . . . . . . . . . . . . . . . . 1
Value of Participation Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Method of Directing Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Time for Directing Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Irrevocability of Transfer Direction . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Direction to Purchase Common Stock After the Conversion . . . . . . . . . . . . . . . . . 2
Purchase Price of Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Nature of Participant's Interest in the Common Stock . . . . . . . . . . . . . . . . . . . 3
Voting and Tender Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Description of the Profit Sharing Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Eligibility and Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Contributions Under the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Limitations on Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Investment of Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Withdrawals and Distributions From the Sharing Plan . . . . . . . . . . . . . . . . . . . 11
Administration of the Profit Sharing Plan . . . . . . . . . . . . . . . . . . . . . . . . 12
Reports to Profit Sharing Plan Participants . . . . . . . . . . . . . . . . . . . . . . . 12
Plan Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Amendment and Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Merger, Consolidation or Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Federal Income Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ERISA and Other Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Restrictions on Resale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SEC Reporting and Shortswing Profit Liability . . . . . . . . . . . . . . . . . . . . . . 17
</TABLE>
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Experts 18
Legal Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Index to Financial Statements and Supplemental Schedules . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>
<PAGE> 5
THE OFFERING
SECURITIES OFFERED
Up to 1,518,689 shares of Common Stock which may be acquired by the
Profit Sharing Plan for the accounts of employees participating in the Profit
Sharing Plan, as well as participation interests in the Profit Sharing Plan,
are offered hereby. Only employees of the Bank may participate in the Profit
Sharing Plan. Information with regard to the Profit Sharing Plan is contained
in this Prospectus Supplement and information with respect to the Company, the
Conversion and the financial condition, results of operations and business of
the Bank is contained in the attached Prospectus. The address of the principal
executive office of the Company is 15 Beach Street, Staten Island, New York
10304-2713. The Company's telephone number is (718) 447-7900. The address and
telephone number of the Bank's principal executive office are the same as the
Company's.
ELECTION TO PURCHASE COMMON STOCK IN THE CONVERSION
In connection with the Conversion, the Profit Sharing Plan has been
amended to permit each Participant to direct that all or part of the funds
which represent his or her beneficial interest in the assets of the Profit
Sharing Plan may be transferred to an investment fund that will invest in
Common Stock (the "Employer Stock Fund") and used to purchase Common Stock in
the Conversion. The Profit Sharing Plan permits this one-time election outside
the specific election dates as discussed below. The ability of a Participant
to purchase Common Stock in the Conversion pursuant to directions to transfer
all or a portion of their beneficial assets in the Profit Sharing Plan will be
based upon the Participant's status as an Eligible Account Holder and/or
Supplemental Eligible Account Holder and/or purchases by such Plan Participant
in the Community Offering and the availability of Common Stock. See
"Description of the Profit Sharing Plan - Investment of Contributions." The
Trustee of the Profit Sharing Plan will follow the Participants' directions to
purchase Common Stock in the Conversion. Funds not transferred to the Employer
Stock Fund will remain in the other investment funds of the Profit Sharing Plan
as directed by the Participants.
VALUE OF PARTICIPATION INTERESTS
The assets of the Profit Sharing Plan were valued as of July 21, 1997
and each Participant was informed of the value of his or her beneficial
interest in the Profit Sharing Plan. The value represented the market value as
of July 21, 1997 of past contributions to the Profit Sharing Plan by the Bank
and the Participants and any earnings thereon, less previous withdrawals.
METHOD OF DIRECTING TRANSFER
The last page of this Prospectus Supplement is a form to direct a
transfer among investment funds (the "Investment Form"). If a Participant
wishes to transfer all or part of his or her beneficial interest in the assets
of the Profit Sharing Plan to the purchase of
<PAGE> 6
Common Stock in the Conversion, he or she should indicate that decision in Part
2 of the Investment Form. If a Participant does not wish to make such an
election, he or she does not need to take any action.
TIME FOR DIRECTING TRANSFER
The deadline for submitting a direction to transfer amounts to the
Employer Stock Fund to purchase Common Stock in the Conversion is ____________,
1997. The Investment Form should be returned to the Bank by no later than
12:00 noon, Eastern Time, on such date.
IRREVOCABILITY OF TRANSFER DIRECTION
A Participant's direction to transfer amounts credited in the Profit
Sharing Plan to his or her accounts to the Employer Stock Fund in order to fund
the purchase of Common Stock in the Conversion shall be irrevocable.
Subsequent to the Conversion, however, Participants will be able to direct
transfers within the Profit Sharing Plan, as explained below.
DIRECTION TO PURCHASE COMMON STOCK AFTER THE CONVERSION
After the Conversion, a Participant may direct that a certain
percentage of his or her interests in the trust fund established for the Profit
Sharing Plan (the "Trust Fund") be transferred to the Employer Stock Fund and
invested in Common Stock. Alternatively, a Participant may direct that a
certain percentage of his or her interest in the Employer Stock Fund be
transferred to the Trust Fund to be invested in accordance with the terms of
the Profit Sharing Plan. Participants will be permitted to direct that future
contributions made to the Profit Sharing Plan by or on their behalf be invested
in Common Stock. Following the initial election, the allocation of a
Participant's interest in the investment funds may be changed as allowed by the
Profit Sharing Plan. The initial election to invest a percentage of his or her
interest in the Employer Stock Fund shall not be counted as one of the changes
in investment direction that are otherwise permitted to be made by the Profit
Sharing Plan. Special restrictions apply to transfers directed by those
Participants who are officers, directors and principal stockholders of the
Company who are subject to the provisions of Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "1934 Act").
PURCHASE PRICE OF COMMON STOCK
The funds transferred to the Employer Stock Fund for the purchase of
Common Stock in the Conversion will be used by the Trustee to purchase Common
Stock through the exercise of subscription rights granted to Participants as an
Eligible Account Holder, Supplemental Eligible Account Holder, Other Member or
officer or employee under the Plan of Conversion. The price paid for such
shares of Common Stock will be the same
2
<PAGE> 7
price as is paid by all other persons who purchase Common Stock in the
Conversion. The prices paid by the Trustee for shares of Common Stock will not
exceed "adequate consideration" as defined in Section 3(18) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA").
NATURE OF A PARTICIPANT'S INTEREST IN THE COMMON STOCK
The Common Stock will be held in the name of the Trustee for the
Profit Sharing Plan. Each Participant has an allocable interest in the
investment funds of the Profit Sharing Plan but not in any particular assets of
the Profit Sharing Plan. Accordingly, a specific number of shares of Common
Stock will not be directly attributable to the account of any Participant.
Earnings, e.g. , gains and losses, are allocated to the Account of a
Participant based upon the particular investment designations of the
Participants. Therefore, earnings with respect to a Participant's Account
should not be affected by the investment designations (including investments
in Common Stock) of other Participants.
VOTING AND TENDER RIGHTS OF COMMON STOCK
The Trustee will generally exercise voting and tender rights
attributable to all Common Stock held by the Trust as directed by Participants
with interests in the Employer Stock Fund. With respect to each matter as to
which holders of Common Stock have a right to vote, each Participant will be
allocated a number of voting instruction rights reflecting his or her
proportionate interest in the Employer Stock Fund. The number of shares of
Common Stock held in the Employer Stock Fund that are voted in the affirmative
and negative on each matter shall be proportionate to the number of voting
instruction rights exercised in the affirmative and negative, respectively. In
the event of a tender offer for Common Stock, the Plan provides that each
Participant will be allotted a number of tender instruction rights reflecting
his or her proportionate interest in the Employer Stock Fund. The percentage
of shares of Common Stock held in the Employer Stock Fund that will be tendered
will be the same as the percentage of the total number of tender instruction
rights that are exercised in favor of tendering. The remaining shares of
Common Stock held in the Employer Stock Fund will not be tendered. The Profit
Sharing Plan makes provision for Participants to exercise their voting
instruction rights and tender instruction rights on a confidential basis.
DESCRIPTION OF THE PROFIT SHARING PLAN
INTRODUCTION
The Profit Sharing Plan has been in effect since May 1, 1987. The
Profit Sharing Plan is a qualified retirement plan which includes a cash or
deferred arrangement established in accordance with requirements under Section
401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the trust pursuant to which the assets
3
<PAGE> 8
of the Profit Sharing Plan are held is intended to be a qualified trust under
Section 501(a) of the Code.
The Bank intends that the Profit Sharing Plan, in operation, will
comply with the requirements under Section 401(a) and Section 401(k) of the
Code. The Bank will adopt any amendments to the Profit Sharing Plan that may
be necessary to ensure the qualified status of the Profit Sharing Plan under
the Code and applicable Treasury Regulations.
The Profit Sharing Plan is an "individual account plan" other than a
"money purchase pension plan" within the meaning of ERISA. As such, the Profit
Sharing Plan is subject to all of the provisions of Title I (Protection of
Employee Benefit Rights) and Title II (Amendments to the Internal Revenue Code
Relating to Profit Sharing Plans) of ERISA, except the funding requirements
contained in Part 3 of Title I of ERISA, which by their terms do not apply to
an individual account plan (other than a money purchase plan). The Profit
Sharing Plan is not subject to Title IV (Plan Termination Insurance) of ERISA.
Neither the funding requirements contained in Part 3 of Title I of ERISA nor
the plan termination insurance provisions contained in Title IV of ERISA will
be extended to Participants (as defined below) or beneficiaries under the
Profit Sharing Plan.
Applicable federal law requires the Profit Sharing Plan to impose
substantial restrictions on the right of a Participant to withdraw amounts held
for his or her benefit under the Profit Sharing Plan prior to the Participant's
termination of employment with the Bank. A substantial federal tax penalty
also may be imposed on withdrawals made prior to the Participant's attainment
of age 59 1/2, regardless of whether such a withdrawal occurs during his or her
employment with the Bank or after termination of employment.
The following statements are summaries of certain provisions of the
Profit Sharing Plan. They are not complete and are qualified in their entirety
by the full text of the Profit Sharing Plan, which is incorporated by reference
herein. Terms not otherwise defined herein are otherwise defined in the Profit
Sharing Plan. Copies of the Profit Sharing Plan are available to all employees
upon request to the Plan Administrator. Each employee is urged to read
carefully the full text of the Profit Sharing Plan.
ELIGIBILITY AND PARTICIPATION
Certain employees of the Employer are eligible to participate in the
Profit Sharing Plan as of the first payroll period on or after the first day of
the calendar month designated by the eligible employee ("Participation Date")
following completion of one year of service (at least 1,000 hours during a
twelve consecutive month period) with the Bank. Employees compensated on an
hourly, daily, commission fee or retainer basis, leased employees (within the
meaning of Section 414(n) of the Code) and employees covered by a collective
bargaining agreement which does not expressly provide for their coverage under
the Profit Sharing Plan, are not eligible to participate in the Profit Sharing
Plan.
4
<PAGE> 9
As of [________ __, 1997], there were approximately ___ employees
eligible to participate in the Profit Sharing Plan, and ____ employees had
elected to participate in the Profit Sharing Plan.
CONTRIBUTIONS UNDER THE PROFIT SHARING PLAN
401(k) CONTRIBUTIONS. Each Participant in the Profit Sharing Plan is
permitted to elect to reduce his or her Compensation (as defined below)
pursuant to a "Compensation Reduction Agreement" by an amount not less than 1%
and not more than 8% and have that amount contributed to the Profit Sharing
Plan on his or her behalf. These amounts are credited to the Participant's
"Basic Contribution Account." The Profit Sharing Plan defines "Compensation"
as a Participant's "Base Compensation" from the Employer for the year prior to
any reduction pursuant to a Compensation Reduction Agreement. Base
Compensation includes salary, Basic Contributions (the contributions of the
Employer made in connection with the Participant's Compensation Reduction
Agreement), wages and wage continuation payments to an employee who is absent
due to illness or disability of a short-term nature. The term Compensation
does not include overtime, commissions, expense allowances, severance pay,
fees, bonuses, contributions other than Basic Contributions made by the
Employer to the Profit Sharing Plan, and contributions made by the Employer to
any other pension, insurance, welfare, or other employee benefit or deferred
compensation plan. The annual compensation of each Participant taken into
account under the Profit Sharing Plan is limited to $150,000 (adjusted for
increases in the cost of living as permitted by the Code). Generally, a
Participant may elect to modify the amount contributed to the Profit Sharing
Plan under his or her Compensation Reduction Agreement not more often than
twice in any Plan Year by filing the applicable form to a Profit Sharing Plan
representative at least 10 days prior to the first day of the payroll period
for which the change is to become effective. However, special restrictions
apply to persons subject to Section 16 of the 1934 Act. Basic Contributions
are transferred by the Employer to the Trustee of the Plan.
Notwithstanding the preceding, a Participant who receives a hardship
distribution under the terms of the Profit Sharing Plan, may not be eligible to
make additional contributions under a Compensation Reduction Agreement for a
period of twelve moths after the receipt of the hardship distribution.
EMPLOYER CONTRIBUTIONS. The Bank makes discretionary contributions
to the Profit Sharing Plan, subject to the limitations on the deductibility of
such contributions set forth in the Code. For Participants in the Profit
Sharing Plan for less than 5 years, the Bank may contribute for each Plan Year
50% of each Participant's Basic Contributions up to a maximum of 6% of the
Participants' Basic Contributions. For Participants in the Profit Sharing Plan
greater than 5 years but less than 10 years the Bank may contribute for each
Plan Year 75% of each Participant's Basic Contributions up to 6% of the
Participant's Basic Contributions. For Participants in the Profit Sharing Plan
greater than 10 years the Bank
5
<PAGE> 10
may contribute for each Plan Year 100% of each Participant's Basic Contribution
up to a maximum of 6% of the Participant's Basic Contribution.
Such amounts are credited to the "Participant's Matching Contribution
Account." After the Conversion, at the discretion of the Bank, the Employer
contributions made with respect to Participants who are Bank employees will be
credited to the Participant's Account in the Bank's Employee Stock Ownership
Plan. At its discretion, the Employer may make an additional contribution to
the Plan as of the end of the Plan Year in an amount determined by the Employer
for the purpose of ensuring that the Profit Sharing Plan complies with Section
401(k) of the Code ("Special Contribution"). Such amounts are credited to the
Participant's Basic Contribution Accounts. Special Contributions may be made
only to the accounts of non-highly compensated employees.
LIMITATIONS ON CONTRIBUTIONS
LIMITATIONS ON ANNUAL ADDITIONS AND BENEFITS. Pursuant to the
requirements of the Code, the Profit Sharing Plan provides that the amount of
contributions and forfeitures allocated to each Participant's Basic
Contribution Account and Matching Contribution Account during any plan year may
not exceed the lesser of 25% of the Participant's Section 415 Compensation for
the Plan Year or $30,000 (adjusted for increases in the cost of living as
permitted by the Code). A Participant's Section 415 Compensation is a
Participant's Compensation, excluding any Employer contribution to the Profit
Sharing Plan or to any other plan of deferred compensation or any distributions
from a plan of deferred compensation. In addition, annual additions shall be
limited to the extent necessary to prevent the limitations set forth in the
Code for all of the qualified defined benefit plans and defined contribution
plans maintained by the Bank from being exceeded. To the extent that these
limitations would be exceeded by reason of excess annual additions with respect
to a Participant, such excess will be disposed of as follows:
(i) Any excess amount in the Participant's Account will be used to
reduce the Employer's contributions for such Participant in the next Limitation
Year, and each succeeding Limitation Year if necessary; and
(ii) If an excess amount still exists and the Participant is not
covered by the Profit Sharing Plan at the end of the Limitation Year, the
excess amount during the succeeding Limitation Year, shall be allocated to
each Participant then actively participating in the Profit Sharing Plan.
LIMITATION ON 401(k) PLAN CONTRIBUTIONS. The annual amount of
Deferred Compensation under a Compensation Reduction Agreement of a Participant
(when aggregated with any elective deferrals of the Participant under a
simplified employee pension plan or a tax-deferred annuity) may not exceed
$7,000 adjusted for increases in the cost of living as permitted by the Code
(the limitation for 1997 is $9,500). Contributions in excess of this
limitation ("excess deferrals") will be included in the Participant's gross
income for federal income tax purposes in the year they are made. In addition,
any such excess
6
<PAGE> 11
deferral will again be subject to federal income tax when distributed by the
Profit Sharing Plan to the Participant, unless the excess deferral (together
with any income allocable thereto) is distributed to the Participant not later
than the first April 15th following the close of the taxable year in which the
excess deferral is made. Any income on the excess deferral that is distributed
not later than such date shall be treated, for federal income tax purposes, as
earned and received by the Participant in the taxable year in which the excess
deferral is made.
LIMITATION ON PLAN CONTRIBUTIONS FOR HIGHLY COMPENSATED EMPLOYEES.
Sections 401(k) and 401(m) of the Code limit the amount of Deferred
Compensation that may be made to the Profit Sharing Plan in any Plan Year on
behalf of Highly Compensated Employees (defined below) in relation to the
amount of Deferred Compensation made by or on behalf of all other employees
eligible to participate in the Profit Sharing Plan. Specifically, the actual
deferral percentage (i.e., the average of the ratios, calculated separately for
each eligible employee in each group, by dividing the amount of Deferred
Compensation credited to the Basic Contribution Account of such eligible
employee by such eligible employee's compensation for the Plan Year) of the
Highly Compensated Employees may not exceed the greater of (i) 125% of the
actual deferral percentage of all other eligible employees, or (ii) the lesser
of (x) 200% of the actual deferral percentage of all other eligible employees,
or (y) the actual deferral percentage of all other eligible employees plus two
percentage points. In addition, the actual contribution percentage for such
Plan Years (i.e., the average of the ratios calculated separately for each
eligible employee in each group, by dividing the amount of voluntary Employee
and Employer matching contribution credited to the Matching Contribution
Account and Special Contribution of such eligible employee by such eligible
employee's compensation for the Plan Year) of the Highly Compensated Employees
may not exceed the greater of (i) 125% of the actual contribution percentage of
all other eligible employees, or (ii) the lesser of (x) 200% of the actual
contribution percentage of all other eligible employees, or (y) the actual
contribution percentage of all other eligible employees plus two percentage
points.
In general, for years beginning after December 31, 1996, a Highly
Compensated Employee includes any employee who, during the Plan Year or the
preceding Plan Year, (1) was at any time a 5% owner (i.e., owns directly or
indirectly more than 5% of the stock of the Employer, or stock possessing more
than 5% of the total combined voting power of all stock of the Employer), or
(2) for the preceding year (i) had compensation from the employer in excess of
$80,000, and (ii) if the employer elects the application of this clause for
such preceding year, was in the top-group of employees for such preceding year.
An employee is in the top-paid group of employees for any year if such employee
is in the group consisting of the top 20 percent of employees when ranked on
the basis of compensation paid during such year. Such amounts are adjusted
annually to reflect increases in the cost of living.
In order to prevent the disqualification of the Profit Sharing Plan,
any amount contributed by Highly Compensated Employees that exceeds the average
deferral limitation
7
<PAGE> 12
in any Plan Year ("excess contributions"), together with any income allocable
thereto, must be distributed to such Highly Compensated Employees before the
close of the following Plan Year. However, the Employer will be subject to a
10% excise tax on any excess contributions unless such excess contributions,
together with any income allocable thereto, either are recharacterized or are
distributed before the close of the first 2 1/2 months following the Plan Year
to which such excess contributions relate.
TOP-HEAVY PLAN REQUIREMENTS. If for any Plan Year the Profit Sharing
Plan is a Top-Heavy Plan (as defined below), then (i) the Bank may be required
to make certain minimum contributions to the Profit Sharing Plan on behalf of
non-key employees (as defined below), and (ii) certain additional restrictions
would apply with respect to the combination of annual additions to the Profit
Sharing Plan and projected annual benefits under any defined benefit plan
maintained by the Bank.
In general, the Profit Sharing Plan will be regarded as a "Top-Heavy
Plan" for any Plan Year if, as of the last day of the preceding Plan Year, the
aggregate balance of the Accounts of Participants who are Key Employees exceeds
60% of the aggregate balance of the Accounts of all Participants. Key
Employees generally include any employee who, at any time during the Plan Year
or any of the four preceding Plan Years, is (1) an officer of the Employee
having annual compensation in excess of 50% of the amount under Section
415(b)(1)(A) of the Code ($60,000 for 1997), (2) one of the ten employees
having annual compensation greater than the Section 415(c)(1)(A) amount
($30,000 for 1997) and owning, directly or indirectly, the largest interests in
the Company, (3) a 5% owner of the Company, (i.e., owns directly or indirectly
more than 5% of the stock of the Company, or stock possessing more than 5% of
the total combined voting power of all stock of the Bank) or (4) a 1% owner of
the Company having annual compensation in excess of $150,000 (160,000 for
1997).
INVESTMENT OF CONTRIBUTIONS
GENERAL. All amounts credited to Participants' Accounts under the
Profit Sharing Plan are held in the Plan Trust (the "Trust") which is
administered by the Trustee appointed by the Bank's Board of Directors.
Prior to __________________, 1997, the Accounts of a Participant held
in the Trust have been invested by the Trustee at the direction of the
Participant in the following funds:
a. Core Equity Fund;
b. Emerging Growth Equity Fund;
c. Value Equity Fund;
d. Intermediate - Term Bond Fund;
e. Actively Managed Bond Fund;
f. Short-Term Investment Fund.
The Profit Sharing Plan, as amended effective _______________, now
provides that in addition to the Funds specified above, a Participant who is
employed by the Bank may
8
<PAGE> 13
direct the Trustee to invest all or a portion of his Basic Contribution Account
or Rollover Account in the Stock Fund. The Matching Contribution Account of
Participants who are Bank employees will be entirely invested in Employer Stock
under the terms of Staten Island Savings Bank Employee Stock Ownership Plan
being implemented by the Bank.
At least once in each calendar quarter, but in no event more
frequently than two times each Plan Year, a Participant may elect to have both
past and future contributions and additions to the Participant's Basic
Contribution Account and Rollover Account invested either in the Employer Stock
Fund or among such other Funds. [PARTICIPANTS MAY ALSO ELECT TO HAVE PAST
CONTRIBUTIONS TO THEIR MATCHING CONTRIBUTION ACCOUNTS INVESTED IN EITHER THE
EMPLOYER STOCK FUND OR AMONG SUCH OTHER FUNDS.] These elections will be
effective on the effective date of the Participant's written notice to the plan
administrator, provided such notice is filed with the administrator at least 10
days before it is to become effective. Any amounts credited to a Participant's
Accounts for which investment directions are not given will be invested in
accordance with the terms of the Profit Sharing Plan.
A Participant who receives a loan from the Profit Sharing Plan has a
separate account established under the Profit Sharing Plan. The balance of a
Participant's loan account represents the unpaid principal and interest (if
any) of such participant's loan from the Profit Sharing Plan. Repayments of
principal and payments of interest on loans are invested by the Trustee as
directed by the Participant or, if no investment directions are given, in
accordance with the terms of the Plan.
The net gain (or loss) of the Funds from investments (including
interest payments, dividends, realized and unrealized gains and losses on
securities, and expenses paid from the Trust) will be determined at least
monthly during the Plan Year. For purposes of such allocations, all assets of
the Trust are valued at their fair market value.
PREVIOUS FUNDS. Prior to _______________, contributions under the
Plan were invested in the seven Funds specified above. The annual percentage
return on these funds for the prior three years was:
<TABLE>
<CAPTION>
1996 1995 1994
------ ------ ------
<S> <C> <C> <C> <C>
a. Core Equity Fund 21.53% 40.17% 1.31%
b. Emerging Growth Equity Fund 27.09 42.83 2.53
c. Value Equity Fund 25.90 33.96 (1.14)
d. Intermediate -Term Bond Fund 4.02 13.99 (2.54)
e. Actively Managed Bond Fund 3.15 17.70 (4.21)
f. Short-term Investment Fund 4.70 5.39 3.40
</TABLE>
THE EMPLOYER STOCK FUND. The Employer Stock Fund will consist of
investment in Common Stock made on and after the effective date of the
Conversion. Cash dividends, if any, paid on Common Stock held in the Employer
Stock Fund will be credited to a cash dividend subaccount for each Participant
investing in the Employer Stock Fund. The Board of Directors of the Company
may consider a policy of paying cash dividends on the Common Stock in the
future; however, no decision as to the amount or timing of cash dividends, if
any, has been made. The Trustee will, to the extent practicable, use all
9
<PAGE> 14
amounts held by it in the Employer Stock Fund (except the amounts credited to
cash dividend subaccounts) to purchase shares of Common Stock of the Company.
It is expected that all purchases will be made at prevailing market prices.
Under certain circumstances, the Trustee may be required to limit the daily
volume of shares purchased. Pending investment in Common Stock, assets held in
the Employer Stock Fund will be placed in bank deposits and other short-term
investments.
When Common Stock is purchased or sold, the cost or net proceeds are
charged or credited to the Accounts of Participants affected by the purchase or
sale. Participants' Accounts will also be adjusted for any brokerage
commissions, transfer fees and other expenses incurred in the sale and purchase
of Common Stock for the Employer Stock Fund. A Participant's Account will be
adjusted to reflect changes in the value of shares of Common Stock resulting
from stock dividends, stock splits and similar changes.
As of the date of this Prospectus Supplement, none of the shares of
Common Stock have been issued or are outstanding and there is no established
market for the Common Stock. Accordingly, there is no record of the historical
performance of the Employer Stock Fund. Performance will be dependent upon a
number of factors, including the financial condition and profitability of the
Company and the Bank and market conditions for the Common Stock generally.
INVESTMENTS IN THE EMPLOYER STOCK FUND MAY INVOLVE CERTAIN SPECIAL
RISKS IN INVESTMENT IN COMMON STOCK OF THE COMPANY. FOR A DISCUSSION OF THESE
RISK FACTORS, SEE "RISK FACTORS" IN THE PROSPECTUS ON PAGE _____.
VESTING
A Participant at all times has a fully vested nonforfeitable interest
in his Basic Contribution Account and the earnings thereon under the Plan.
Generally, a Participant vests in his or her Matching Contribution Account
under the Plan according to the following schedule:
<TABLE>
<CAPTION>
Period of Service Vested Percentage
----------------------------- -----------------
<S> <C>
less than 2 years 0%
2 years but less 3 years 20%
3 years but less than 4 years 40%
4 years but less than 5 years 60%
5 years but less than 6 years 80%
6 or more years 100%
</TABLE>
10
<PAGE> 15
WITHDRAWALS AND DISTRIBUTIONS FROM THE PLAN
WITHDRAWALS PRIOR TO TERMINATION OF EMPLOYMENT. A Participant may
make a withdrawal from his (i) Basic Contribution Account plus certain earnings
thereon, and (ii) the net value of his or her (a) Rollover Contribution
Account, (b) Matching Contribution Account, if 100% vested, and (c) Profit
Sharing Account, if 100% vested subject to the hardship distribution rules
under the Plan. These requirements are designed to ensure that Participants
have a true financial need before a withdrawal may be made.
A Participant who has attained age 59 1/2 may be entitled to withdraw
up to twice during the Plan Year all or any portion of net value of his or her
Basic Contribution Account and Rollover Contribution Account.
DISTRIBUTION UPON RETIREMENT, DISABILITY OR TERMINATION OF EMPLOYMENT.
Payment of benefits to a Participant who retires, incurs a disability, or
otherwise terminates employment generally shall be made in a lump sum cash
payment as soon as administratively feasible after such termination of
employment if the vested value of the Participant's Account is $3,500 or less.
If the vested portion of the Participant's Account balance is greater than
$3,500, the Participant may receive a distribution (subject to the minimum
distribution rules) in a lump sum payment: (a) as soon as administratively
possible after termination, (b) as of any Valuation Date up to 13 months after
termination or (c) as of the date the Participant attains normal retirement
age. Alternatively, a Participant who terminates service as of his or her
retirement day may elect to receive benefits in the form installments over a
period not to exceed 15 years. Benefit payments ordinarily shall be made not
later than 60 days following the end of the Plan Year in which occurs the
latest of the Participant's: (i) termination of employment; (ii) the attainment
of age 65 or (iii) the 10th anniversary of commencement of participation in the
Plan; but in no event later than the April 1 following the calendar year in
which the Participant attains age 70 1/2; or the calendar year in which the
employee retires. However, if the vested portion of the Participant's Account
balances exceeds $3,500, no distribution shall be made from the Plan prior to
the Participant's attaining age 65 unless the Participant elects to receive to
an earlier distribution.
DISTRIBUTION UPON DEATH. A Participant who dies before his or her
entire vested interest has been distributed shall have his or her benefits paid
to the surviving spouse in a lump sum as soon as administratively possible
following the date of his death. If however, the Participant elected prior to
his death to receive a deferred lump sum payment and had not yet received such
distribution, such Beneficiary shall receive a lump sum distribution as of the
earlier of the Valuation Date in the Participant's election or the last
Valuation Date which occurs within one (1) year of the Participant's death. If
the Participant elected to and began receiving a distribution in the form of
installments, such Beneficiary shall receive distributions over the remaining
period, at the times set forth in such election. With respect to an unmarried
Participant, and in the case of a married Participant with spousal consent to
the designation of another beneficiary, payment of benefits to the beneficiary
of a deceased Participant shall be made in the form of a lump-sum payment or in
the same manner described above as to a Participant with a surviving spouse.
11
<PAGE> 16
NONALIENATION OF BENEFITS. Except with respect to federal income tax
withholdings and as provided with respect to a qualified domestic relations
order (as defined in the Code), benefits payable under the Profit Sharing Plan
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution, or levy of any
kind, either voluntary or involuntary, and any attempt to anticipate, alienate,
sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any
rights to benefits payable under the Profit Sharing Plan shall be void.
ADMINISTRATION OF THE PROFIT SHARING PLAN
The Trustee with respect to the Profit Sharing Plan is the named
fiduciary of the Profit Sharing Plan for purposes of Section 402 of ERISA.
The Trustee is appointed by the Board of Directors of the Bank to
serve at its pleasure. The current Trustee of the Profit Sharing Plan is the
RSI Retirement Trust. However, an additional Trustee is being appointed to
hold funds invested in the Employer Stock Fund.
The Trustee receives, holds and invests the contributions to the
Profit Sharing Plan in trust and distributes them to Participants and
beneficiaries in accordance with the terms of the Profit Sharing Plan and the
directions of the Plan Administrator. The Trustee is responsible for
investment of the assets of the Trust.
REPORTS TO PROFIT SHARING PLAN PARTICIPANTS
[THE ADMINISTRATOR (AS DEFINED BELOW) WILL FURNISH TO EACH PARTICIPANT
A STATEMENT AT LEAST QUARTERLY SHOWING (i) THE BALANCE IN THE PARTICIPANT'S
ACCOUNT AS OF THE END OF THAT PERIOD, (ii) THE AMOUNT OF CONTRIBUTIONS
ALLOCATED TO SUCH PARTICIPANT'S ACCOUNT FOR THAT PERIOD, AND (iii) THE
ADJUSTMENTS TO SUCH PARTICIPANT'S ACCOUNT TO REFLECT EARNINGS OR LOSSES,
DISTRIBUTIONS, LOANS DISBURSED, LOAN REPAYMENTS AND/OR TRANSFERS BETWEEN
INVESTMENT FUNDS.]
PLAN ADMINISTRATION
Pursuant to the terms of the Profit Sharing Plan, the Profit Sharing
Plan is administered by one or more persons who are appointed by and who serve
at the pleasure of the Bank (the "Administrator").
Currently, the Administrator is RSI Retirement Trust. The address and
telephone number of the Administrator is 317 Madison Avenue, New York, New York
10017; (___) ________. The Administrator is responsible for the administration
of the Profit Sharing Plan, interpretation of the provisions of the Profit
Sharing Plan, prescribing procedures for filing applications for benefits,
preparation and distribution of information explaining the Profit Sharing Plan,
maintenance of Profit Sharing Plan records, books of account and all other data
necessary for the proper administration of the Profit Sharing Plan, and
preparation and filing of all returns and reports relating to the Profit
Sharing Plan which are required to be filed with the U.S. Department of Labor
and the IRS, and for all disclosures
12
<PAGE> 17
required to be made to Participants, Beneficiaries and others under Sections
104 and 105 of ERISA.
AMENDMENT AND TERMINATION
It is the current intention of the Bank to continue the Profit Sharing
Plan indefinitely. Nevertheless, the Bank may terminate the Profit Sharing
Plan at any time. If the Profit Sharing Plan is terminated in whole or in
part, then regardless of other provisions in the Profit Sharing Plan, each
Participant affected by such termination shall have a fully vested interest in
his Account. The Bank reserves the rights to make, from time to time, any
amendment or amendments to the Profit Sharing Plan which do not cause any part
of the Trust to be used for, or diverted to, any purpose other than the
exclusive benefit of Participants or their beneficiaries; provided, however,
that the Bank may make any amendment it determines necessary or desirable, with
or without retroactive effect, or comply with ERISA.
MERGER, CONSOLIDATION OR TRANSFER
In the event of the merger or consolidation of the Profit Sharing Plan
with another plan, or the transfer of the Trust assets to another plan, the
Profit Sharing Plan requires that each Participant will (if either the Profit
Sharing Plan or the other plan were then terminated) receive a benefit
immediately after the merger, consolidation or transfer which is equal to or
greater than the benefit he would have been entitled to receive immediately
before the merger, consolidation or transfer (if the Profit Sharing Plan had
then terminated).
FEDERAL INCOME TAX CONSEQUENCES
GENERAL. The following is only a brief summary of certain federal
income tax aspects of the Profit Sharing Plan which are of general application
under the Code and is not intended to be a complete or definitive description
of the federal income tax consequences of participating in or receiving
distributions from the Profit Sharing Plan. The summary is necessarily general
in nature and does not purport to be complete. Moreover, statutory provisions
are subject to change, as are their interpretations, and their applicable may
vary in individual circumstances. Finally, the consequences under applicable
state and local income tax laws may not be the same as under the federal income
tax laws. PARTICIPANTS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO
ANY DISTRIBUTION FROM THE PROFIT SHARING PLAN AND TRANSACTIONS INVOLVING THE
PROFIT SHARING PLAN.
The Profit Sharing Plan will be submitted to the IRS in a timely
manner for a determination that it is qualified under Section 401(a) and 401(k)
of the Code, and that the related Trust is exempt from tax under Section 501(a)
of the Code. A plan that is "qualified" under these sections of the Code is
afforded special tax treatment which include the following: (1) the sponsoring
employer is allowed an immediate tax deduction for the amount contributed to
the Profit Sharing Plan each year; (2) participants pay no current income tax
on amounts contributed by the employer on their behalf; and (3) earnings of the
plan are tax-exempt thereby permitting the tax-free accumulation of income and
gains on
13
<PAGE> 18
investments. The Profit Sharing Plan will be administered to comply in
operation with the requirements of the Code as of the applicable effective date
of any change in the law. The Bank expects to timely adopt any amendments to
the Profit Sharing Plan that may be necessary to maintain the qualified status
of the Profit Sharing Plan under the Code. Following such an amendment, the
Bank will submit the Profit Sharing Plan to the IRS for a determination that
the Profit Sharing Plan, as amended, continues to qualify under Sections 401(a)
and 501(a) of the Code and that it continues to satisfy the requirements for a
qualified cash or deferred arrangement under Section 401(k) of the Code.
Should the Profit Sharing Plan receive from the IRS an adverse determination
letter regarding its tax exempt status, all participants would generally
recognize income equal to their vested interest in the Profit Sharing Plan, the
participants would not be permitted to transfer amounts distributed from the
Profit Sharing Plan to an IRA or to another qualifies retirement plan, and the
Bank may be denied certain deductions taken with respect to the Profit Sharing
Plan.
LUMP SUM DISTRIBUTION. A distribution from a Profit Sharing Plan to a
Participant or the beneficiary of a Participant will qualify as a Lump Sum
Distribution if it is made: (i) within one taxable year to the Participant or
beneficiary; (ii) on account of the Participant's death, disability or
separation from service, or after the Participant attains age 59 1/2; and (iii)
consists of the balance to the credit of the Participant under this Profit
Sharing Plan and all other profit sharing plans, if any, maintained by the
Bank. The portion of any Lump Sum Distribution that is required to be included
in the Participant's or beneficiary's taxable income for federal income tax
purposes (the "total taxable amount") consists of the entire amount of such
Lump Sum Distribution less the amount of after-tax contributions, if any, made
by the Participant to any other profit sharing plans maintained by the Bank
which is included in such distribution.
AVERAGING RULES. The Small Business Job Protection Act of 1996
repealed five-year income averaging for lump sum distributions for taxable
years beginning after 1999. Ten-year averaging which was grandfathered for
individuals who attained the age of 50 before January 1, 1986 was retained.
The portion of the total taxable amount of a Lump Sum Distribution that is
attributable to participation after 1973 in this Profit Sharing Plan or in any
other profit sharing plan maintained by the Bank (the "ordinary income
portion") will be taxable generally as ordinary income for federal income tax
purposes. However for distributions prior to the effective date, a Participant
who has completed at least five years of participation in this Plan before the
taxable year in which the distribution is made, or a beneficiary who receives a
Lump Sum Distribution on account of the Participant's death (regardless of the
period of the Participant's participation in this Plan or any other profit
sharing plan maintained by the Employer), may elect to have the ordinary income
portion of such Lump Sum Distribution taxed according to a special averaging
rule ("five-year averaging"). The election of the special averaging rules may
apply only to one Lump Sum Distribution received on or after the Participant
turns 50 1/2 and the recipient elects to have any other Lump Sum Distribution
from a qualified plan received in the same taxable year taxed under the special
averaging rule. Under a special grandfathering rule, individuals who turned 50
by 1986 may elect to have their Lump Sum Distribution taxed under either the
five-year averaging rule or under the prior law ten-year averaging rule. Such
individuals also may elect to have that portion of the Lump Sum Distribution
attributable to the
14
<PAGE> 19
participant's pre-1974 participation in the Plan taxed at a flat 20% rate as
gain from the sale of a capital asset.
COMMON STOCK INCLUDED IN LUMP SUM DISTRIBUTION. If a Lump Sum
Distribution includes Common Stock, the distribution generally will be taxed in
the manner described above, except that the total taxable amount will be
reduced by the amount of any net unrealized appreciation with respect to such
Common Stock, i.e., the excess of the value of such Common Stock at the time of
the distribution over its cost of the Profit Sharing Plan. The tax basis of
such Common Stock, to the Participant or beneficiary for purposes of computing
gain or loss on its subsequent sale will be the value of the Common Stock at
the time of distribution less the amount of net unrealized appreciation. Any
gain on a subsequent sale or other taxable disposition of such Common Stock, to
the extent of the amount of net unrealized appreciation at the time of
distribution, will be considered long-term capital gain regardless of the
holding period of such Common Stock. Any gain on a subsequent sale or other
taxable disposition of the Common Stock in excess of the amount of net
unrealized appreciation at the time of distribution will be considered either
short-term capital gain or long-term capital gain depending upon the length of
the holding period of the Common Stock. The recipient of a distribution may
elect to include the amount of any net unrealized appreciation in the total
taxable amount of such distribution to the extent allowed by the regulations to
be issued by the IRS.
DISTRIBUTION: ROLLOVERS AND DIRECT TRANSFERS TO ANOTHER QUALIFIED
PLAN OR TO AN IRA. Pursuant to a change in the law, effective January 1, 1993,
virtually all distributions from the Profit Sharing Plan may be rolled over to
another qualified retirement plan or to an Individual Retirement Account
("IRA") without regard to whether the distribution is a Lump Sum Distribution
or a Partial Distribution. Effective January 1, 1993, Participants have the
right to elect to have the Trustee transfer all or any portion of an "eligible
rollover distribution" directly to another plan qualified under Section 401(a)
of the Code or to an IRA. If the Participant does not elect to have an
"eligible rollover distribution" transferred directly to another qualified plan
or to an IRA, the distribution will be subject to a mandatory federal
withholding tax equal to 20% of the taxable distribution. The principal types
of distributions which do not constitute eligible rollover distributions are
(i) an annuity type distribution made over the life expectancy of the
Participant (or Participant and another) or for a period of 10 years or more,
(ii) a minimum distribution required by Section 409 (a) (9) of the Code, or
(iii) the portion of any distribution not includable in gross income, except
that unrealized appreciation in employee securities can be included in an
eligible rollover distribution. The tax law change described above did not
modify the special tax treatment of Lump Sum Distributions, that are not rolled
over or transferred i.e., forward averaging, capital gains tax treatment and
the nonrecognition of net unrealized appreciation, discussed earlier.
ERISA AND OTHER QUALIFICATION
As noted above, the Profit Sharing Plan is subject to certain
provisions of ERISA, and will be submitted to the IRS for a determination that
it is qualified under Section 401(a) of the Code.
15
<PAGE> 20
THE FOREGOING IS ONLY A BRIEF SUMMARY OF CERTAIN FEDERAL INCOME TAX
ASPECTS OF THE PROFIT SHARING PLAN WHICH ARE OF GENERAL APPLICATION UNDER THE
CODE AND IS NOT INTENDED TO BE A COMPLETE OR DEFINITIVE DESCRIPTION OF THE
FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATING IN OR RECEIVING DISTRIBUTIONS
FROM THE PROFIT SHARING PLAN. ACCORDINGLY, EACH PARTICIPANT IS URGED TO
CONSULT A TAX ADVISOR CONCERNING THE FEDERAL, STATE AND LOCAL TAX CONSEQUENCES
OF PARTICIPATING IN AND RECEIVING DISTRIBUTIONS FROM THE PROFIT SHARING PLAN.
RESTRICTIONS ON RESALE
Any person receiving shares of Common Stock under the Profit Sharing
Plan who is an "affiliate" of the Company as the term "affiliate" is used in
Rules 144 and 405 under the Securities Act of 1933, as amended (the "Securities
Act"), (e.g., directors, officers and substantial shareholders of the Company)
may reoffer or resell such shares only pursuant to a registration statement
filed under the Securities Act assuming the availability thereof, pursuant to
Rule 144 or some other exemption of the registration requirements of the
Securities Act. Any person who may be an "affiliate" of the Company may wish
to consult with counsel before transferring any Common Stock owned by him. In
addition, Participants are advised to consult with counsel as to the
applicability of Section 16 of the 1934 Act which may restrict the sale of
Common Stock where acquired under the Profit Sharing Plan, or other sales of
Common Stock.
Persons who are not deemed to be "affiliates" of the Company at the
time of resale will be free to resell any shares of Common Stock to them under
the Plan, either publicly or privately, without regard to the Registration and
Prospectus delivery requirements of the Securities Act or compliance with the
restrictions and conditions contained in the exemptive rules thereunder. An
"affiliate" of the Company is someone who directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common control,
with the Company. Normally, a director, principal officer or major shareholder
of a corporation may be deemed to be an "affiliate" of that corporation. A
person who may be deemed an "affiliate" of the Company at the time of a
proposed resale will be permitted to make public resales of the Company's
Common Stock only pursuant to a "reoffer" Prospectus or in accordance with the
restrictions and conditions contained in Rule 144 under the Securities Act or
some other exemption from registration, and will not be permitted to use this
Prospectus in connection with any such resale. In general, the amount of the
Company's Common Stock which any such affiliate may publicly resell pursuant to
Rule 144 in any three-month period may not exceed the greater of one percent of
the Company's Common Stock then outstanding or the average weekly trading
volume reported on the New York Stock Exchange during the four calendar weeks
prior to the sale. Such sales may be made only through brokers without
solicitation and only at a time when the Company is current in filing the
reports required of it under the 1934 Act.
16
<PAGE> 21
SEC REPORTING AND SHORT-SWING PROFIT LIABILITY
Section 16 of the 1934 Act imposes reports and liability requirements
on officers, directors and persons beneficially owning more than ten percent of
public companies such as the Company. Section 16(a) of the 1934 Act requires
the filing of reports of beneficial ownership. Within ten days of becoming a
person subject to the reporting requirements of Section 16(a), a Form 3
reporting initial beneficial ownership must be filed with the Securities and
Exchange Commission ("SEC"). Certain changes in beneficial ownership, such as
purchases, sales, gifts and participation in savings and retirement plans must
be reported periodically, either on a Form 4 within ten days after the end of
the month in which a change occurs, or annually on a Form 5 within 45 days
after the close of the Company's fiscal year. Participation in the Employer
Stock Fund of the Plan by officers, directors and persons beneficially owning
more than ten percent of the Company must be reported to the SEC annually on a
Form 5 by such individuals.
In addition to the reporting requirements described above, Section
16(b) of the 1934 Act provides for the recovery by the Company of profits
realized by any officer, director or any person beneficially owning more than
ten percent of the Company's Common Stock ("Section 16(b) Persons") resulting
from the purchase and sale or sale and purchase of the Company's Common Stock
within any six-month period.
The SEC has adopted rules that provide exemption from the profit
recovery provisions of Section 16(b) for participant-directed employer security
transactions within an employee benefit plan, such as the Plan, provided
certain requirements are met.
EXPERTS
The financial statements of the Profit Sharing Plan as of December 31,
1995 and 1994 on and for the years then ended have been included herein in
reliance upon the report of Arthur Andersen, independent certified public
accountant, appearing elsewhere wherein, and upon the authority of said firm as
experts in accounting and auditing.
LEGAL OPINIONS
The validity of the issuance of the Common Stock will be passed upon
by Elias, Matz, Tiernan & Herrick L.L.P., Washington, D. C., which firm acted
as special counsel for the Company and the Bank in connection with the
Conversion.
17
<PAGE> 22
STATEN ISLAND SAVINGS BANK
401(k) SAVINGS PLAN
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1995 AND 1994
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
18
<PAGE> 23
STATEN ISLAND SAVINGS BANK
401(k) SAVINGS PLAN
Index to Financial Statements
Independent Auditors' Report
Financial Statements:
Statements of Net Assets Available for Plan Benefits
Statements of Changes in Net Assets Available for Plan Benefits
Notes to Financial Statements
Supplemental Schedules:
Schedule of Investment
Schedule of Reportable Transactions
F-1
<PAGE> 24
STATEN ISLAND SAVINGS BANK
401(k) SAVINGS PLAN IN RSI RETIREMENT TRUST
INVESTMENT FORM
---------------------
Name of Plan Participant:
---------------------------
Social Security Number:
---------------------------
1. INSTRUCTIONS. In connection with the proposed reorganization
of Staten Island Savings Bank (the "Conversion"), the Staten Island Savings
Bank 401(k) Savings Plan in RSI Retirement Trust ("Profit Sharing Plan") has
been amended to permit participants to direct their current account balances
for their Basic Contribution Account and Matching Contribution Account and
Rollover Account into a new fund: the Employer Stock Fund. The percentage of a
participant's account transferred at the direction of the participant into the
Employer Stock Fund will be used to purchase shares of common stock of Staten
Island Bancorp, Inc. (the "Common Stock").
To direct a transfer of all or part of the funds credited to your
Accounts to the Employer Stock Fund, you should complete and file this form
with the Human Resources Department, no later than ______________, 1997. A
representative for the Plan Administrator will retain a copy of this form and
return a copy to you. If you need any assistance in completing this form,
please contact _____________________. If you do not complete and return this
form to the Plan Administrator by _________, the funds credited to your
accounts under the Plan will continue to be invested in accordance with your
prior investment direction, or in accordance with the terms of the Plan if no
investment direction has been provided.
2. INVESTMENT DIRECTIONS. I hereby direct the Plan Administrator
to invest the following percentage (in multiples of not less than 25%) of my
Basic Contribution Account, Matching Contribution Account and Rollover Account.
a. Core Equity Fund ____%
b. Emerging Growth Fund ____%
c. Value Equity Fund ____%
d. Intermediate - Term Investment Fund ____%
e. Actively Managed Bond Fund ______%
f. Short-Term Investment Fund _____%
g. Employer Stock Fund ________%
NOTE: The total percentage of directed investments, above, may not
exceed 100%.
3. ACKNOWLEDGEMENT OF PARTICIPANT. I understand that this
Investment Form shall be subject to all of the terms and conditions of the
Profit Sharing Plan. I acknowledge that I have received a copy of the
Prospectus and the Prospectus Supplement.
- ----------------------------------- ----------
Signature of Participant Date
- ----------------------------------------------------
ACKNOWLEDGEMENT OF RECEIPT BY ADMINISTRATOR. This Investment Form was received
by the Plan Administrator and will become effective on the date noted below.
- ----------------------------------- ----------
By: Date
<PAGE> 25
STATEN ISLAND SAVINGS BANK
401(k) SAVINGS PLAN
PLAN EIN: 13-5579133
PLAN NUMBER: 002
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
AS OF DECEMBER 31, 1995 AND 1994
TOGETHER WITH AUDITORS' REPORT
<PAGE> 26
STATEN ISLAND SAVINGS BANK
401(k) SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Plan Benefits as of
December 31, 1995 and 1994 2
Statement of Changes in Net Assets Available for Plan Benefits
for the Year Ended December 31, 1995 3
NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES 4-9
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1995 10
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR
THE YEAR ENDED DECEMBER 31, 1995 11
</TABLE>
NOTE: All other schedules are omitted as they are not applicable
or are not required based on disclosure requirements
of the Employee Retirement Income Security Act of
1974 and applicable regulations issued by the
Department of Labor.
<PAGE> 27
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees of
Staten Island Savings Bank:
We have audited the accompanying statements of net assets available for plan
benefits of the Staten Island Savings Bank 401(k) Savings Plan as of December
31, 1995 and 1994, and the related statement of changes in net assets available
for plan benefits for the year ended December 31, 1995. These financial
statements and the schedules referred to below are the responsibility of the
plan administrator. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Staten
Island Savings Bank 401(k) Savings Plan as of December 31, 1995 and 1994, and
the changes in its net assets available for plan benefits for the year ended
December 31, 1995, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules as listed in
the accompanying index are presented for purposes of additional analysis and
are not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedules have been subjected to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
As explained in the notes thereto, information certified by the trustee and
presented in the schedules of assets held for investment purposes and
reportable transactions does not disclose the historical cost of certain
investments. Disclosure of this information, which is not considered material
to the financial statements taken as a whole, is required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974.
New York, New York
October 15, 1996
-1-
<PAGE> 28
STATEN ISLAND SAVINGS BANK
401(k) SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
AS OF DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
------------- ------------
<S> <C> <C>
ASSETS:
Loans to participants $ 617,990 $ 462,815
------------- ------------
Investments stated at fair value-
Core Equity Fund 5,597,914 3,788,559
Emerging Growth Equity Fund 986,421 623,226
Value Equity Fund 751,949 490,804
Actively Managed Bond Fund 886,934 652,450
Intermediate-Term Bond Fund 433,343 320,840
Short-Term Investment Fund 856,184 802,602
------------- ------------
Total investments 9,512,745 6,678,481
Cash 13,756 5,517
Employer contributions receivable - 6,256
------------- ------------
Net assets available for plan benefits $ 10,144,491 $ 7,153,069
============= ============
</TABLE>
The accompanying notes are an integral part of these statements.
-2-
<PAGE> 29
STATEN ISLAND SAVINGS BANK
401(k) SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Emerging
Core Equity Growth Value Equity
Fund Equity Fund Fund
------------ ----------- ------------
<C> <C> <C> <C>
ADDITIONS:
Contributions-
Employer $ 549,329 $111,114 $ 94,559
Employee 210,661 43,415 40,121
------------ -------- --------
759,990 154,529 134,680
Investment income-
Realized and unrealized gain (loss) on investments 1,518,497 263,439 169,641
Loan repayments (including interest) 217,210 36,144 33,795
Interfund transfers - 8,430 5,664
------------ -------- --------
Total additions 2,495,697 462,542 343,780
------------ -------- --------
DEDUCTIONS:
Distributions to participants or beneficiaries 366,978 47,321 36,783
New loans 296,316 52,026 45,852
Interfund transfers 23,048 - -
------------ -------- --------
Total deductions 686,342 99,347 82,635
------------ -------- --------
Net increase (decrease) 1,809,355 363,195 261,145
NET ASSETS AVAILABLE FOR PLAN BENEFITS,
beginning of year 3,788,559 623,226 490,804
------------ -------- --------
NET ASSETS AVAILABLE FOR PLAN BENEFITS,
end of year $ 5,597,914 $986,421 $751,949
============ ======== ========
</TABLE>
<TABLE>
<CAPTION>
Actively Intermediate-
Managed Term Short-Term
Bond Fund Bond Fund Investment
--------- ------------- -----------
<C> <C> <C> <C>
ADDITIONS:
Contributions-
Employer $104,547 $ 62,807 $ 120,302
Employee 44,635 27,176 48,517
-------- --------- -----------
149,182 89,983 168,819
Investment income-
Realized and unrealized gain (loss) on investments 117,571 45,812 41,111
Loan repayments (including interest) 32,055 15,615 33,868
Interfund transfers 6,261 - 7,184
-------- --------- -----------
Total additions 305,069 151,410 250,982
-------- --------- -----------
DEDUCTIONS:
Distributions to participants or beneficiaries 38,475 18,713 141,124
New loans 32,110 15,703 56,276
Interfund transfers - 4,491 -
-------- --------- -----------
Total deductions 70,585 38,907 197,400
-------- --------- -----------
Net increase (decrease) 234,484 112,503 53,582
NET ASSETS AVAILABLE FOR PLAN BENEFITS,
beginning of year 652,450 320,840 802,602
-------- --------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS,
end of year $886,934 $ 433,343 $ 856,184
======== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
Summary of
Loans to
Participants Other Total
------------ ----------- ------------
<C> <C> <C> <C>
ADDITIONS:
Contributions-
Employer $ - $ 1,983 $ 1,044,641
Employee - - 414,525
----------- ---------- -----------
- 1,983 1,459,166
Investment income-
Realized and unrealized gain (loss) on investments - - 2,156,071
Loan repayments (including interest) (325,524) - 43,163
Interfund transfers - - 27,539
----------- ---------- -----------
Total additions (325,524) 1,983 3,685,939
----------- ---------- -----------
DEDUCTIONS:
Distributions to participants or beneficiaries 17,584 - 666,978
New loans (498,283) - -
Interfund transfers - - 27,539
----------- ---------- -----------
Total deductions (480,699) - 694,517
----------- ---------- -----------
Net increase (decrease) 155,175 1,983 2,991,422
NET ASSETS AVAILABLE FOR PLAN BENEFITS,
beginning of year 462,815 11,773 7,153,069
----------- ---------- -----------
NET ASSETS AVAILABLE FOR PLAN BENEFITS,
end of year $617,990 $ 13,756 $10,144,491
=========== ========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
-3-
<PAGE> 30
STATEN ISLAND SAVINGS BANK
401(k) SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
DECEMBER 31, 1995 AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING
AND ADMINISTRATIVE POLICIES
Basis of Accounting
The accounting records of the Staten Island Savings Bank 401(k) Savings Plan
(the "Plan") are maintained on the cash basis of accounting which is not
significantly different from the accrual basis of accounting.
Investments
The trust established under the Plan is administered through participation in
the RSI Retirement Trust (the "RSI Trust"). The RSI Trust is a tax-exempt
trust registered as an open-end management investment company under the
Investment Company Act and is the Trustee of the Plan. Plan assets held by the
RSI Trust are represented as units of beneficial interest in one or more of the
investment funds offered by the RSI Trust. The net asset value of the units of
beneficial interest in each investment fund are based on the market value of
the underlying assets of the funds, determined generally by reference to
available market prices. Net investment income and net appreciation
(depreciation) in fair value of units held represents the Plan's proportionate
share of the net investment income and realized and unrealized investment gains
and losses of the RSI Trust investment funds.
Forfeitures
Effective April 1, 1990, the Plan was amended, allocating forfeitures as a
reduction of employer and future employer matching contributions. Employer
contributions were reduced by forfeitures in the amount of $34,938 in 1995.
2. PLAN DESCRIPTION
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
-4-
<PAGE> 31
General
The Plan is a defined contribution plan, sponsored by Staten Island Savings
Bank (the "Bank"), covering all salaried employees of the Bank who have
completed one year of service. It is subject to the provisions of the Employee
Retirement Income Security Act of 1974.
Participant Accounts
Each participant's account is credited with the participant's contributions and
an allocation of the Bank's contribution and Plan earnings. Allocations are
based on participant earnings or account balances, as defined. The payment to
which a participant is entitled is the benefit that can be provided from the
participant's account.
Vesting
Participants are immediately vested in their voluntary contributions plus
actual earnings thereon. Vesting in the remainder of their accounts is based
on years of continuous service. A participant is 100 percent vested after six
years of credited service.
Retirement Provisions and Withdrawals
Upon disability, death, retirement or termination, a participant (or his
estate) is entitled to receive a lump sum distribution equal to the value of
his or her account, or installments over a period not to exceed 15 years of
accumulated plan benefits. Participants may also, in certain instances, make
cash withdrawals to meet an unusual or financial emergency. Plan participants
terminated or retired during the Plan year are entitled to distributions of
$167,658 and $182,987 as of December 31, 1995 and 1994, respectively, which are
included in net assets in the accompanying Statements of Net Assets Available
for Plan Benefits.
Loan Provisions
Participants are permitted to obtain loans from the Plan in an amount of up to
50% of the net value of their 100% vested balance, not to exceed $50,000.
Interest is charged on these loans at a rate similar to that which would be
charged at other financial institutions. Loans bear interest at a rate between
9.5% and 10% for 1995 and 7% and 9.5% for 1994. Loan terms cannot exceed 5
years unless the proceeds are used to finance the purchase of a primary
residence, in which case the term of the loan cannot exceed a period of 15
years.
3. FUNDING POLICY
Participants may contribute a minimum of 1% up to a maximum of 8% in 1995 and
1994 of their annual wages before bonuses and overtime not to exceed the
maximum amount permitted under the Internal Revenue Code ($9,240 in 1995 and
1994). The Bank will match 50% to 100% of participant contributions, based on
years of service up to a maximum of 6% of annual wages.
-5-
<PAGE> 32
The Bank may, at its discretion, make contributions to eligible employees on
September 30, based on compensation for the twelve-month period ending
September 30. Such discretionary contributions were $759,716 and $572,001 in
1995 and 1994, respectively. In addition to any other contributions, the Bank
may, at its discretion, make special contributions to the basic contributions
account of any eligible employee.
4. INVESTMENTS
As of December 31, 1995 and 1994, as amended May 31, 1995, the Plan assets were
primarily invested in the following funds administered by the Trustee as
follows:
Core Equity Fund - Consists of investments in a broadly diversified group
of large, financially sound, high-quality companies.
Emerging Growth Equity Fund - Consists of investments primarily in smaller
companies with higher than average returns on equity, earnings growth
potential and dividend growth potential. The fund's holdings focus on
companies with market capitalization of less than $1 billion.
Value Equity Fund - Consists of investments in financially sound companies
that have low price earnings ratios, above average dividend yields,
favorable price-to-book ratios, and are currently out of favor in the
marketplace.
Actively Managed Bond Fund - Consists of investments in bonds with a full
spectrum of maturities (0-30 years) and of high quality.
Intermediate-Term Bond Fund - Consists of investments in high-quality fixed
income securities that mature within ten years or have an expected average
life of ten years or less. In terms of quality, at all times at least 50%
of the investments must be in U.S. Government issues and at least 75% of the
total investments must be instruments rated "AA" or better by certain rating
agencies.
Short-Term Investment Fund - Consists of investments in high-quality cash
equivalent type investments offering substantial liquidity and capital
preservation. The average maturity of the fund's holdings is less than one
year.
-6-
<PAGE> 33
Investments in Trust Funds Managed
by the RSI Retirement Trust
Changes in the units of beneficial interest of the trust funds managed by
the RSI Trust in which the Plan participated from January 1, 1995 to
December 31, 1995, were as follows:
<TABLE>
<CAPTION>
Equity Funds
------------------------------------------
Unit Fair
Units Value Value
---------- ------ -------------
<S> <C> <C> <C>
CORE EQUITY FUND:
Beginning 106,870.49 $35.45 $ 3,788,559
Ending 112,656.75 49.69 5,597,914
---------- ------ -------------
Net increase (decrease) 5,786.26 $14.24 $ 1,809,355
========== ====== =============
EMERGING GROWTH EQUITY FUND:
Beginning 16,735.39 $37.24 $ 623,226
Ending 18,545.23 53.19 986,421
---------- ------ -------------
Net increase (decrease) 1,809.84 $15.95 $ 363,195
========== ====== =============
VALUE EQUITY FUND:
Beginning 18,877.08 $26.00 $ 490,804
Ending 21,589.11 34.83 751,949
---------- ------ -------------
Net increase (decrease) 2,712.03 $ 8.83 $ 261,145
========== ====== =============
<CAPTION>
Fixed-Income Funds
------------------------------------------
Unit Fair
Units Value Value
---------- ------ -------------
<S> <C> <C> <C>
ACTIVELY MANAGED BOND FUND:
Beginning 24,940.75 $27.16 $ 652,450
Ending 28,805.92 30.79 886,934
---------- ------ -------------
Net increase (decrease) 3,865.17 $ 4.63 $ 234,484
========== ====== =============
INTERMEDIATE-TERM BOND FUND:
Beginning 12,681.42 $25.30 $ 320,840
Ending 15,025.78 28.84 433,343
---------- ------ -------------
Net increase (decrease) 2,344.35 $ 3.54 $ 112,503
========== ====== =============
SHORT-TERM INVESTMENT FUND:
Beginning 43,243.64 $18.56 $ 802,602
Ending 43,772.19 19.56 856,184
---------- ------ -------------
Net increase (decrease) 528.55 $ 1.00 $ 53,582
========== ====== =============
</TABLE>
-7-
<PAGE> 34
The fair value of individual investments that represent 5% or more of the
Plan's total net assets as of December 31, 1995 and 1994, is as follows:
<TABLE>
<S> <C>
1995:
Core Equity Fund $ 5,597,914
Emerging Growth Equity Fund 986,421
Value Equity Fund 751,949
Actively Managed Bond Fund 886,934
Short-Term Managed Bond Fund 856,184
1994:
Core Equity Fund 3,788,559
Emerging Growth Equity Fund 623,226
Value Equity Fund 490,804
Actively Managed Bond Fund 652,450
Short-Term Managed Bond Fund 802,602
</TABLE>
5. PLAN TERMINATION
The Bank intends to continue the Plan indefinitely but reserves the right to
amend or terminate it. If the Plan is terminated or if there is a complete
discontinuance of contributions, the Plan participants will be fully vested in
their rights under the Plan.
6. TAX STATUS
The Plan has received a favorable determination letter from the Internal
Revenue Service dated February 16, 1995, indicating that the Plan, as amended
through December 14, 1993, is tax exempt under Section 401(a) of the Internal
Revenue Code of 1986.
7. ADMINISTRATIVE COSTS
The Plan incurs certain administrative costs in connection with its investment
activities which are borne by the Bank.
8. ACQUISITION OF GATEWAY STATE BANK
On August 18, 1995, the Bank acquired Gateway State Bank ("Gateway"). Under
the provisions of the acquisition agreement, all salaried, active employees of
Gateway on August 18, 1995 who became salaried, active employees of the Bank on
August 19, 1995 were recognized under the Plan for purposes of Plan eligibility
and were given credit for years of service for purposes of vesting in employer
matching contributions. The Plan was amended as such. On December 31, 1995,
the market value of the Gateway 401(k) Plan assets totaled approximately
$1,930,800, which will subsequently be transferred to the Plan.
-8-
<PAGE> 35
STATEN ISLAND SAVINGS BANK
401(k) SAVINGS PLAN
PLAN EIN: 13-5579133
PLAN NUMBER: 002
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
AS OF DECEMBER 31, 1995
<TABLE>
<CAPTION>
Units Unit
Description of Investment Held Value Fair Value
------------------------- ---------- ------- -------------
<S> <C> <C> <C>
RSI Retirement Trust Series Mutual Fund
Equity Funds:
Core 112,656.75 $ 49.69 $ 5,597,914
Emerging Growth 18,545.23 53.19 986,421
Value 21,589.11 34.83 751,949
-------------
7,336,284
-------------
Fixed-Income Funds:
Actively Managed Bonds 28,805.92 30.70 886,934
Intermediate-Term Bonds 15,025.78 28.84 433,343
Short-Term Investments 43,772.19 19.56 856,184
-------------
2,176,461
-------------
Total fund value 9,512,745
Loans to Participants (Interest rates range from 9.5%
to 10% with maturities from one to fifteen years) 617,990
-------------
Total investments $ 10,130,735
=============
</TABLE>
NOTE: The historical cost of investments is not presented as the
Trustee is unable to provide such information.
This schedule should be read in conjunction with the accompanying
financial statements and notes thereto.
-9-
<PAGE> 36
STATEN ISLAND SAVINGS BANK
401(k) SAVINGS PLAN
PLAN EIN: 13-5579133
PLAN NUMBER: 002
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Current
Value
of Assets
Number Number on
Description of Purchase of Selling Transaction
of Assets Purchases Price Sales Price Date
----------- --------- ---------- ------ --------- -------------
<S> <C> <C> <C> <C> <C>
SERIES OF TRANSACTIONS:
Core Equity Fund 82 $1,022,154 - $ - $ 1,022,154
Core Equity Fund - - 85 731,295 731,295
</TABLE>
NOTE: For the purpose of this schedule, reportable transactions
include either (i) a single transaction or (ii) a series of
transactions involving a specific investment which are
individually or in the aggregate in excess of 5% of the
current value of Plan assets at the beginning of a plan year.
There are no persons that are known to be parties in
interest in the Plan.
The historical cost of investments is not presented as the
Trustee is unable to provide such information.
The net gain or (loss) is not presented as the Trustee is
unable to provide such information.
This schedule should be read in conjunction with the accompanying
financial statements and notes thereto.
-10-
<PAGE> 37
PROSPECTUS
STATEN ISLAND BANCORP, INC.
(Proposed Holding Company for Staten Island Savings Bank)
35,595,238 Shares (Anticipated Maximum) of Common Stock
$10.00 per Share
Staten Island Bancorp, Inc. (the "Company"), a Delaware corporation,
is offering up to 35,595,238 shares of its common stock, par value $.01 per
share (the "Common Stock"), in connection with the conversion of Staten Island
Savings Bank ("Staten Island Savings" or the "Bank") from a federally-chartered
mutual savings bank to a federally-chartered stock savings bank pursuant to the
Bank's plan of conversion (the "Plan" or "Plan of Conversion"). Under certain
circumstances, the Company may increase the amount of Common Stock offered
hereby to up to 40,934,524 shares. The simultaneous conversion of the Bank to
stock form, the issuance of the Bank's stock to the Company and the offer and
sale of the Common Stock by the Company are referred to herein as the
"Conversion."
Nontransferable rights to subscribe for the Common Stock have been
granted, in order of priority, to (i) certain depositors of Bank, (ii) the
Company's Employee Stock Ownership Plan ("ESOP"), (iii) certain other
depositors of the Bank, and (iv) directors, officers and employees of the Bank,
subject to the limitations described herein (the "Subscription Offering"). In
the event that there are any shares of Common Stock which are not sold in the
Subscription Offering, the Company anticipates that it will offer any such
shares of Common Stock for sale in a community offering (the "Community
Offering"). If necessary, any shares of Common Stock not subscribed for in the
Subscription Offering or purchased in the Community Offering will be offered to
members of the general public on a best efforts basis by a selling group of
broker-dealers managed by Keefe, Bruyette & Woods, Inc. ("Keefe, Bruyette"), in
a syndicated community offering (the "Syndicated Community Offering"). (The
Subscription Offering, Community Offering and Syndicated Community Offering are
referred to collectively as the "Offerings"). The purchase price in the
Offerings is $10.00 per share (the "Purchase Price").
With the exception of the ESOP, the maximum amount that any person may
purchase in any particular priority category in the Offerings is generally
limited to 30,000 shares of Common Stock (subject to adjustment). No person,
together with associates and persons acting in concert with such person, may
purchase in the aggregate more than 1.0% of the Common Stock sold in the
Conversion (subject to adjustment). The minimum purchase is 25 shares. See
"The Conversion - Limitations on Common Stock Purchases."
THE SUBSCRIPTION OFFERING WILL CLOSE AT 12:00 NOON, EASTERN TIME, ON
_______, 1997 (THE "EXPIRATION DATE"), UNLESS EXTENDED BY THE COMPANY AND THE
BANK, WITH REGULATORY
i
<PAGE> 38
APPROVAL IF NECESSARY. THE COMMUNITY OFFERING OR ANY SYNDICATED COMMUNITY
OFFERING MUST BE COMPLETED WITHIN 45 DAYS AFTER THE CLOSE OF THE SUBSCRIPTION
OFFERING, OR _______, 1997, UNLESS EXTENDED BY THE COMPANY AND THE BANK, WITH
REGULATORY APPROVAL IF NECESSARY. No single extension can exceed 90 days, and
the extensions may not go beyond _______, 1999. Any extension of the Offerings
will be conducted in accordance with the terms described herein. Orders
submitted are irrevocable until the completion of the Conversion; provided
that, if the Conversion is not completed within the 45-day period referred to
above, unless such period has been extended, all subscribers will have their
funds returned promptly with interest at the Bank's passbook rate, and all
withdrawal authorizations will be cancelled. The completion of the
Subscription Offering is subject to potential delay and subscribers will have
no access to funds used to subscribe for shares of Common Stock, regardless of
any such delay. See "The Conversion - Subscription Offering and Subscription
Rights."
THE COMPANY HAS APPLIED TO HAVE ITS COMMON STOCK LISTED ON THE NEW
YORK STOCK EXCHANGE ("NYSE") UNDER THE SYMBOL "SIB." PRIOR TO THE OFFERINGS,
THERE HAS NOT BEEN A PUBLIC MARKET FOR THE COMMON STOCK, AND THERE CAN BE NO
ASSURANCE THAT AN ACTIVE AND LIQUID TRADING MARKET FOR THE COMMON STOCK WILL
DEVELOP OR THAT THE COMMON STOCK WILL TRADE AT OR ABOVE THE PURCHASE PRICE.
SEE "MARKET FOR COMMON STOCK."
FOR INFORMATION ON HOW TO SUBSCRIBE, CALL THE STOCK SALES CENTER AT
(718) ___-____. FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED
BY EACH PROSPECTIVE INVESTOR, SEE "RISK FACTORS" AT PAGE __ HEREOF.
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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, THE OFFICE OF THRIFT
SUPERVISION, OR ANY OTHER FEDERAL AGENCY OR STATE SECUR-
ITIES COMMISSION, NOR HAS SUCH COMMISSION, OFFICE OR
OTHER AGENCY PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
ii
<PAGE> 39
<TABLE>
<CAPTION>
=============================================================================================================
Estimated
Underwriting Estimated
Subscription Fees and Other Net
Price(1) Expenses(2) Proceeds(3)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum Per Share $10.00 $0.22 $9.78
- -------------------------------------------------------------------------------------------------------------
Midpoint Per Share $10.00 $0.20 $9.80
- -------------------------------------------------------------------------------------------------------------
Maximum Per Share $10.00 $0.19 $9.81
- -------------------------------------------------------------------------------------------------------------
Maximum Per Share, as adjusted $10.00 $0.18 $9.82
- -------------------------------------------------------------------------------------------------------------
Total Minimum(1) $263,095,238 $5,726,056 $257,369,182
- -------------------------------------------------------------------------------------------------------------
Total Midpoint(1) $309,523,810 $6,217,264 $303,306,546
- -------------------------------------------------------------------------------------------------------------
Total Maximum(1) $355,952,381 $6,708,472 $349,243,909
- -------------------------------------------------------------------------------------------------------------
Total Maximum, as adjusted(4) $409,345,238 $7,273,370 $402,071,868
=============================================================================================================
</TABLE>
(1) Determined in accordance with an independent appraisal prepared by RP
Financial, LC. ("RP Financial") dated July 17, 1997, which states that the
estimated pro forma market value of the Common Stock ranged from $263.1
million to $356.0 million (the "Estimated Valuation Range"), or between
26,309,524 and 35,595,238 shares of Common Stock at the Purchase Price.
See "The Conversion - Stock Pricing and Number of Shares to be Issued."
(2) Consists of the estimated costs to the Bank and the Company arising from
the Conversion, including estimated fixed expenses of $3,000,000 and fees
to be paid to Keefe, Bruyette in connection with the Subscription and
Community Offerings, which fees are estimated to be $2,726,056,
$3,217,264, $3,708,472, and $4,273,370 at the minimum, mid-point, maximum
and maximum, as adjusted. Keefe, Bruyette is not obligated to purchase
any shares of Common Stock in the Offerings. Such fees paid to Keefe,
Bruyette may be deemed to be underwriting fees. See "The Conversion -
Marketing Arrangements." The actual fees and expenses may vary from the
estimates.
(3) Actual net proceeds may vary substantially from estimated amounts.
Includes the purchase of shares of Common Stock by the ESOP, which
initially will be deducted from the Company's stockholders' equity. For
the effects of such purchase, see "Capitalization" and "Pro Forma Data."
(4) Reflects a 15% increase in the Estimated Valuation Range, which may occur
without a resolicitation of subscribers or any right of cancellation, to
reflect changes in market and financial conditions prior to completion of
the Conversion or to fill the order of the ESOP.
-------------------------------------------
KEEFE, BRUYETTE & WOODS, INC.
-------------------------------------------
The date of this Prospectus is ___________, 1997.
iii
<PAGE> 40
[MAP of Registrant's Market area to be produced here.]
1
<PAGE> 41
SUMMARY
This summary is qualified in its entirety by the more detailed
information regarding the Company and the Bank and the Financial Statements of
the Bank appearing elsewhere in this Prospectus.
STATEN ISLAND BANCORP, INC.
Staten Island Bancorp, Inc. is a Delaware corporation organized in
July 1997 by the Bank for the purpose of becoming a unitary holding company of
the Bank. The Company will purchase all of the capital stock of the Bank to be
issued in the Conversion in exchange for 50% of the net Conversion proceeds and
will retain the remaining 50% of the net proceeds as its initial
capitalization. Immediately following the Conversion, the only significant
assets of the Company will be the capital stock of the Bank, the Company's loan
to the ESOP, and the remainder of the net Conversion proceeds retained by the
Company. The business and management of the Company initially will consist
primarily of the business and management of the Bank. Initially, the Company
will neither own nor lease any property, but will instead use the premises and
equipment of the Bank. At the present time, the Company does not intend to
employ any persons other than officers of the Bank, and the Company will
utilize the support staff of the Bank from time to time. Additional employees
will be hired as appropriate to the extent the Company expands or changes its
business in the future. See "Business" and "Management - Management of the
Company."
The Company's executive office is located at the executive office of
the Bank at 15 Beach Street, Staten Island, New York 10304, and its telephone
number is (718) 447-7900.
STATEN ISLAND SAVINGS BANK
The Bank was originally founded as a New York-chartered savings bank
in 1864. In August 1997, the Bank converted to a federally-chartered mutual
savings bank. The Bank is a traditional, full-service, community oriented
savings bank headquartered in Staten Island, New York. As of April 30, 1997,
Staten Island Savings had $1.8 billion of total assets, $1.7 billion of total
liabilities, including $1.6 billion of deposits, and $177.3 million of net
worth (representing 9.6% of total assets). Staten Island Savings is primarily
engaged in attracting deposits from the general public and using those and
other available sources of funds to originate loans secured primarily by
single-family (one- to four-units) residences located in Staten Island and, to
a lesser extent, Brooklyn, New York. The Bank reported $6.9 million of net
income for each of the four month periods ended April 30, 1997 and 1996 and
$21.8 million, $13.2 million and $16.2 million of net income for the years
ended December 31, 1996, 1995 and 1994, respectively. For the four months
ended April 30, 1997, the Bank's annualized return on average assets and return
on average equity were 1.15% and 12.11%, respectively. During the four months
ended April 30, 1997, the Bank's interest rate spread was 4.02% and its net
interest margin was 4.58%.
2
<PAGE> 42
The Bank has long-standing ties to Staten Island with over 133 years
of service to the communities and residents of Staten Island. As of June 30,
1996 (the latest available data), the Bank is the largest depository
institution in terms of deposit market share in Staten Island with 30% of the
total deposits and 23% of the total number of branch offices of depository
institutions in Staten Island. Historically, the Bank also has been among the
leaders in terms of the number and amount of residential mortgage loan
originations in Staten Island. Staten Island Savings' operating strategy
emphasizes customer service and convenience and, in large part, the Bank
attributes its commitment to maintaining customer satisfaction for its market
share position. The Bank attempts to differentiate itself from its competitors
by providing the type of personalized customer service not generally available
from larger banks while offering a greater variety of products and services
than is typically available from smaller, local depository institutions. The
Bank has an experienced management team directing its operations. The Bank's
Chairman and Chief Executive Officer and President and Chief Operating Officer
have 31 years and 27 years, respectively, of service with the Bank while the
other executive officers of the Bank have an average of 14 years of service
with Staten Island Savings. See "Staten Island Savings Bank."
In recent years, the Bank has facilitated its growth through
acquisitions. In 1990, the Bank acquired several branch offices of a former
savings and loan association from the Resolution Trust Corporation and, in
August 1995, the Bank acquired Gateway Bancorp, Inc. and its wholly owned
subsidiary, Gateway State Bank, a New York-chartered commercial bank
("Gateway") which was headquartered in Staten Island, New York, and which was
merged with and into the Bank. The acquisition of Gateway added $276.6 million
in deposits, $124.2 million in loans, $123.5 million in securities and five
branch offices (two of which were combined with other offices) to the Bank's
balance sheet and resulted in $15.6 million of goodwill which is being
amortized over 20 years on a straight-line basis. An integral part of the
Bank's strategy in acquiring Gateway was to facilitate the diversification of
the products and services offered by the Bank. As a commercial bank, Gateway's
efforts were directed more towards the commercial sector than retail consumer
banking which had been the Bank's primary focus. Gateway also offered certain
products and services previously not available from the Bank, such as
commercial business loans and trust services.
The Bank has attempted to capitalize on its acquisition of Gateway by
generally continuing to offer, with certain changes, the products and services
previously offered by Gateway. As a result, the Bank is able to offer its
customers a more complete product line. In addition, the Bank also has
attempted to enhance its business development efforts through active personal
solicitation of potential new customers as well as by increased cross-selling
efforts to existing customers. While the Bank's lending focus continues to be
single-family (one-to four-units) residential mortgage loans, the acquisition
of Gateway has facilitated the Bank's ability to be a more active originator of
commercial real estate loans, construction and land loans and commercial
business loans, which amounted to 11.5%, 3.2%, and 0.9%, respectively, of the
Bank's net loan portfolio at April 30, 1997. In addition, at such date the
Bank's demand deposit accounts amounted to $158.1 million, or 9.8% of total
deposits, compared to $63.0 million, or 5.1% of total deposits, at December 31,
1994.
3
<PAGE> 43
The Bank is subject to examination and comprehensive regulation by the
Office of Thrift Supervision ("OTS"), which is the Bank's chartering authority
and primary federal regulator. The Bank is also regulated by the Federal
Deposit Insurance Corporation ("FDIC"), the administrator of the Bank Insurance
Fund ("BIF"). The Bank is also subject to certain reserve requirements
established by the Board of Governors of the Federal Reserve System ("FRB") and
is a member of the Federal Home Loan Bank ("FHLB") of New York, which is one of
the 12 regional banks comprising the FHLB System.
Staten Island Savings' executive office is located at 15 Beach Street,
Staten Island, New York 10304, and its telephone number is (718) 447-7900.
THE CONVERSION AND THE OFFERINGS
On April 16, 1997, the Board of Trustees of the Bank adopted the Plan
of Conversion pursuant to which the Bank is converting to a federally-chartered
stock savings bank, all the common stock of which will be acquired by the
Company in exchange for 50% of the net Conversion proceeds. The other 50% of
the net Conversion proceeds will be retained by the Company. The Conversion is
subject to OTS approval, which has been conditionally received, and is subject
to approval of the Bank's members at a special meeting to be held for this
purpose on ________, 1997. In addition, the Company has received the
conditional approval of the OTS to become a savings and loan holding company
subject to regulation by the OTS. See "Use of Proceeds" and "The Conversion -
General." By converting to the stock form of organization, the Bank will be
structured in the form used by many other savings institutions, commercial
banks and other business entities. See "The Conversion - Purposes of
Conversion."
Pursuant to the Plan and in connection with the Conversion, the
Company is offering up to 35,595,238 shares of Common Stock in the Subscription
Offering. The Common Stock is first being offered in the Subscription Offering
with nontransferable subscription rights being granted, in the following order
of priority, to (i) depositors of the Bank with account balances of $50.00 or
more as of the close of business on March 31, 1996 ("Eligible Account
Holders"), (ii) the ESOP, (iii) depositors of the Bank with account balances of
$50.00 or more as of the close of business on [JUNE 30, 1997] ("Supplemental
Eligible Account Holders"), (iv) depositors of the Bank as of the close of
business on __________, 1997 (other than Eligible Account Holders and
Supplemental Eligible Account Holders), ("Other Members"), and (v) directors,
officers and employees of the Bank. SUBSCRIPTION RIGHTS WILL EXPIRE IF NOT
EXERCISED BY 12:00 NOON, EASTERN TIME, ON __________, 1997, UNLESS EXTENDED.
It is anticipated that shares not subscribed for in the Subscription
Offering will be offered to certain members of the general public in a
Community Offering and, if necessary, in a Syndicated Community Offering. The
Company and the Bank will reserve the absolute right to reject or accept any
orders in the Community Offering or the Syndicated Community Offering, in whole
or in part, either at the time of receipt of an order or as soon as practicable
following the Expiration Date or any extension thereof.
4
<PAGE> 44
Payments for subscriptions made by cash, check or money order will be
placed in a segregated account at the Bank and will earn interest at the Bank's
passbook rate (2.85% as of the date of this Prospectus) from the date of
receipt until the Conversion is completed or terminated. Payments authorized
by withdrawal from deposit accounts at the Bank will continue to earn interest
at the contractual rate until the Conversion is completed or terminated; these
funds will be otherwise unavailable to the depositor until such time. If a
withdrawal is authorized to fund the purchase of Common Stock, the funds will
be withdrawn upon consummation of the Conversion without penalty.
The Company and the Bank have retained Keefe, Bruyette as consultant
and advisor in connection with the Offerings and to assist in soliciting
subscriptions in the Offerings. Keefe, Bruyette may also manage a selling
group of broker-dealers in the Syndicated Community Offering to facilitate the
Offerings. Keefe, Bruyette is not obligated to take or purchase any shares of
Common Stock in the Offerings. See "The Conversion - Subscription Offering and
Subscription Rights," "- Community Offering" and "- Marketing Arrangements."
RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS
Prior to the completion of the Conversion, no person may transfer or
enter into any agreement or understanding to transfer the legal or beneficial
ownership of the subscription rights issued under the Plan or the shares of
Common Stock to be issued upon their exercise. Each person exercising
subscription rights will be required to certify that the purchase of Common
Stock is solely for the purchaser's own account and that there is no agreement
or understanding regarding the sale or transfer of such shares. See "The
Conversion - Restrictions on Transfer of Subscription Rights and Shares."
SUBSCRIPTION RIGHTS ARE NONTRANSFERABLE AND PERSONS FOUND TO BE ATTEMPTING TO
TRANSFER SUBSCRIPTION RIGHTS WILL BE SUBJECT TO THE FORFEITURE OF SUCH RIGHTS
AND POSSIBLE FURTHER SANCTIONS AND PENALTIES IMPOSED BY THE OTS. The Company
and the Bank will refer to the OTS any situations that they believe may involve
a transfer of subscription rights and will not honor orders known by them to
involve the transfer of such rights.
PURCHASE LIMITATIONS
With the exception of the ESOP, which intends to purchase up to an
aggregate of 8% of the number of shares of Common Stock issued in the
Conversion, or 2,104,761 shares and 2,847,619 shares at the minimum and maximum
of the Estimated Valuation Range, respectively, the maximum amount that any
person may purchase in any priority category in the Subscription Offering, as
well as in the Community Offering and any Syndicated Community Offering, is
generally limited to 30,000 shares of Common Stock. No person, together with
associates of or persons acting in concert with such person, may purchase in
the aggregate more than 1.0% (or 355,952 shares at the maximum of the Estimated
Valuation Range) of the Common Stock sold in the Conversion. For a definition
of the terms "associate" and "acting in concert," see "The Conversion -
Limitations on Common Stock Purchases." At any time during the Offerings, and
without further approval by the members of the Bank, the Company and the Bank
may, in their
5
<PAGE> 45
sole discretion, increase the individual purchase limitations up to 5% of the
shares offered (1,779,761 shares at the maximum of the Estimated Valuation
Range). If the purchase limitation is increased, persons who submitted an order
for 355,952 shares of Common Stock will be given the opportunity to increase
their order. In the event of a decrease in the purchase limitation, any orders
in excess of the revised purchase limitation will be reduced to the extent
necessary. The minimum purchase is 25 shares. See "The Conversion -
Limitations on Common Stock Purchases." In the event of an oversubscription,
shares will be allocated in accordance with the Plan as described in "The
Conversion - Subscription Offering and Subscription Rights" and "- Community
Offering."
STOCK PRICING AND NUMBER OF SHARES TO BE ISSUED IN THE CONVERSION
Federal regulations require the aggregate purchase price of the Common
Stock to be consistent with an independent appraisal of the estimated pro forma
market value of the Common Stock following the Conversion. RP Financial, an
independent appraiser, has advised the Bank that, in its opinion, dated July
17, 1997, the Estimated Valuation Range was from $263.1 million to $356.0
million, with a midpoint of $309.5 million. THIS APPRAISAL OF THE COMMON STOCK
IS NOT INTENDED AND SHOULD NOT BE CONSTRUED AS A RECOMMENDATION OF ANY KIND AS
TO THE ADVISABILITY OF PURCHASING SUCH STOCK, NOR CAN ANY ASSURANCE BE GIVEN
THAT PURCHASERS OF THE COMMON STOCK WILL BE ABLE TO SELL SUCH SHARES AFTER THE
CONVERSION AT OR ABOVE THE PURCHASE PRICE.
All shares of Common Stock issued in the Conversion will be sold at
the Purchase Price of $10.00 per share, which was established by the Boards of
Directors of the Company and the Bank. The actual number of shares to be
issued in the Conversion will be determined by the Company and the Bank based
upon the final updated valuation of the estimated pro forma market value of the
Common Stock, giving effect to the Conversion, at the completion of the
Offerings. The number of shares of Common Stock to be issued is expected to
range from a minimum of 26,309,524 shares to a maximum of 35,595,238 shares.
Subject to approval of the OTS, the Estimated Valuation Range may be increased
or decreased to reflect market and economic conditions prior to the completion
of the Conversion or to fill the order of the ESOP, and under such
circumstances the Company and the Bank may increase or decrease the number of
shares of Common Stock to be issued in the Conversion. No resolicitation of
subscribers will be made and subscribers will not be permitted to modify or
cancel their subscriptions unless the gross proceeds from the sale of the
Common Stock are less than the minimum or more than 15% above the maximum of
the current Estimated Valuation Range. An affirmative response to any
resolicitation must be received by the Bank in order to confirm subscriptions.
In connection with a resolicitation, to the extent that subscriptions are
cancelled, rescinded or reduced, all funds delivered to the Company or the Bank
will be promptly returned with interest earned from the date of receipt, and
withdrawal authorizations will be reduced or cancelled. See "Pro Forma Data,"
"Risk Factors - Possible Dilutive Effect of Issuance of Additional Shares" and
"The Conversion - Stock Pricing and Number of Shares to be Issued."
6
<PAGE> 46
SISB COMMUNITY FOUNDATION
In furtherance of the Bank's commitment to the communities that it
serves, the Plan of Conversion provides for the establishment of a private
charitable foundation in connection with the Conversion. The Plan provides
that the Bank and the Company will create the SISB Community Foundation (the
"Foundation"), which will be incorporated under Delaware law as a nonstock
corporation, and will fund the Foundation with shares of Common Stock
contributed by the Company, as further described below. The Company and the
Bank believe that the funding of the Foundation with Common Stock of the
Company is a means of enhancing the bond between the Bank and the communities
that it serves and thereby enable such communities to share in the potential
growth and success of the Company over the long term. By further enhancing the
Bank's visibility and reputation in the communities that it serves, the Bank
believes that the Foundation will benefit the long term value of the Bank's
community banking franchise. See "The Conversion--Establishment of the
Charitable Foundation--Structure of the Foundation."
The authority for the affairs of the Foundation will be vested in the
Board of Directors of the Foundation, which will be comprised of members of the
Company's Board of Directors and certain other individuals chosen in light of
their commitment and service to charitable and community purposes. The
directors of the Foundation will be responsible for establishing the policies
of the Foundation with respect to grants or donations by the Foundation,
consistent with the purposes for which the Foundation was established, and will
also be responsible for directing the activities of the Foundation, including
matters related to ownership of the Common Stock held by the Foundation.
However, it is expected that establishment of the Foundation will be subject to
certain conditions, including, among others, a requirement that the Common
Stock of the Company held by the Foundation be voted in the same ratio as all
other shares of the Company's Common Stock on all proposals considered by
stockholders of the Company. See "The Conversion--Establishment of the
Charitable Foundation--Regulatory Conditions Imposed on the Foundation."
The Company proposes to fund the Foundation by contributing to the
Foundation immediately following the Conversion a number of shares of
authorized but unissued shares of Common Stock equal to 5.0% of the Common
Stock sold in the Offerings, or 1,315,476 and 1,779,762 shares at the minimum
and maximum of the Estimated Valuation Range, respectively. Such contribution,
once made, will not be recoverable by the Company or the Bank. Assuming the
sale of shares at the maximum of the Estimated Valuation Range and the issuance
of shares to the Foundation, the Company will have 37,375,000 shares issued and
outstanding, of which the Foundation will own 1,779,762 shares, or 4.8%. DUE
TO THE ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK TO THE FOUNDATION, PERSONS
PURCHASING SHARES IN THE CONVERSION WILL HAVE THEIR OWNERSHIP AND VOTING
INTERESTS IN THE COMPANY DILUTED BY 4.8%. SEE "PRO FORMA DATA."
As a result of the establishment of the Foundation, the Company will
recognize an expense of the full amount of the contribution, offset in part by
a corresponding tax benefit, during the quarter in which the contribution is
made, which is expected to be the fourth quarter
7
<PAGE> 47
of 1997. Such expense will reduce earnings and have a material impact on the
Company's earnings for such quarter and for the year. Assuming a contribution
of $17.8 million in Common Stock in 1997, based on the maximum of the Estimated
Valuation Range and assuming a marginal tax rate of 47%, the Company estimates
a net tax effected expense of $9.4 million. In addition, the Bank does not
anticipate making future charitable contributions to the Foundation during the
first five years following the initial contribution to the Foundation. For
further discussion of the Foundation and its impact on purchasers in the
Conversion, see "Risk Factors--Establishment of the Foundation." "Pro Forma
Data," "Comparison of Valuation and Pro Forma Information With No Foundation"
and "The Conversion--Establishment of the Foundation."
BENEFITS OF CONVERSION TO OFFICERS AND DIRECTORS
GENERAL. In connection with the Conversion, the Bank's directors and
executive officers as a group (15 persons) have proposed to purchase 500,000
shares of Common Stock, or 1.9% and 1.4% of the Common Stock at the minimum and
maximum of the Estimated Valuation Range, respectively, excluding shares to be
issued to the Foundation.
THE ESOP. The Company has adopted the ESOP, a tax-qualified benefit
plan for officers and employees of the Company and the Bank, which intends to
purchase 8% of the shares of Common Stock offered in the Conversion, or
2,104,761 shares ($21.0 million) and 2,847,619 shares ($28.5 million) at the
minimum and maximum of the Estimated Valuation Range, respectively. The
Company intends to use a portion of the net proceeds retained by it to make a
loan directly to the ESOP to enable the ESOP to purchase such shares. See
"Management - Management of the Bank - Benefits - Employee Stock Ownership
Plan."
STOCK OPTION PLAN. Following consummation of the Conversion, the
Company intends to adopt a stock option plan for the benefit of the directors,
officers and employees of the Company and the Bank (the "Stock Option Plan"),
pursuant to which the Company intends to reserve a number of shares of Common
Stock equal to an aggregate of 10% of the Common Stock issued in the Conversion
(3,559,523 shares at the maximum of the Estimated Valuation Range) for issuance
pursuant to stock options and stock appreciation rights. The Stock Option Plan
will not be implemented prior to the receipt of stockholder approval of the
plan. For stock option plans implemented within one year of a mutual-to-stock
conversion, OTS regulations currently permit an aggregate of up to 30% of the
shares available under the Stock Option Plan to be granted to non-employee
directors. In addition, OTS regulations further provide that under such stock
option plans, no officer may receive stock options for more than 25% of the
shares available under the stock option plan, which, in the Company's case,
would amount to 889,880 shares if the amount of Common Stock sold in the
Conversion is equal to the maximum of the Estimated Valuation Range. It is
currently anticipated that the Company will implement the Stock Option Plan
within one year of the Conversion and that it will comply with all applicable
OTS regulations. See "Management - Management of the Bank - Benefits - Stock
Option Plan."
8
<PAGE> 48
RECOGNITION AND RETENTION PLAN. Following consummation of the
Conversion, the Company intends to adopt a recognition and retention plan for
the benefit of the directors, officers and employees of the Company and the
Bank (the "Recognition Plan" or "RRP"). The Recognition Plan will not be
implemented prior to the receipt of stockholder approval of the plan. It is
expected that the Recognition Plan will be submitted to stockholders for
approval at the same time as the Stock Option Plan. Upon the receipt of such
approval, the Recognition Plan is expected to purchase a number of shares of
Common Stock either from the Company or in the open market equal to an
aggregate of 4% of the Common Stock issued in the Conversion (1,423,809 shares
or $14.2 million at the maximum of the Estimated Valuation Range). Similar to
the treatment of the Stock Option Plan, current OTS regulations provide that,
with respect to stock benefit plans such as the Recognition Plan implemented
within one year of a mutual-to-stock conversion, an aggregate of no more than
30% of the shares available under such plan may be awarded to non-employee
directors and no more than 25% of the shares available under such plan may be
awarded to any individual officer. It is currently anticipated that the
Company will implement the Recognition Plan within one year of the Conversion
and that it will comply with all applicable OTS regulations. See "Management -
Management of the Bank - Benefits - Recognition Plan."
EMPLOYMENT AGREEMENTS. Upon consummation of the Conversion, the
Company and the Bank intend to enter into three-year employment agreements with
Messrs. Harry Doherty and James Coyle as well as similar agreements with the
Bank's Executive Vice President and four Senior Vice Presidents (collectively,
the "Other Senior Officers"). If the employment of such officers is terminated
as a result of a change in control of the Company, Messrs. Harry Doherty and
James Coyle would each be entitled to a cash severance amount equal to three
times his average annual compensation over his most recent five taxable years.
At least 30 days prior to each annual anniversary date of the employment
agreement, the Boards of Directors of the Company and the Bank shall determine
whether or not to continue the term of the agreements for an additional one
year. See "Management - Management of the Bank - Employment Agreements."
PROSPECTUS DELIVERY AND PROCEDURE FOR PURCHASING SHARES
To ensure that each purchaser receives a Prospectus at least 48 hours
prior to the Expiration Date in accordance with Rule 15c2-8 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), no Prospectus will be
mailed any later than five days prior to such date or hand delivered any later
than two days prior to such date. Execution of the order form will confirm
receipt or delivery of the Prospectus in accordance with Rule 15c2-8. Order
forms will only be distributed with a Prospectus. The Company and the Bank
will accept for processing only orders submitted on original order forms.
Copies of order forms will not be accepted nor will order forms unaccompanied
by an executed certification form. Payment by check, money order, cash or
debit authorization to an existing account at Bank must accompany the order
form. No wire transfers will be accepted.
9
<PAGE> 49
In order to ensure that Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members are properly identified as to their
stock purchase priorities, depositors as of the close of business on the
Eligibility Record Date (March 31, 1996) or the Supplemental Eligibility Record
Date [JUNE 30,] 1997, and/or depositors as of the close of business on the
Voting Record Date, ________ __, 1997, must list all accounts on the stock
order form giving all names on each account and the account numbers. See "The
Conversion - Procedure for Purchasing Shares in the Subscription and Community
Offerings."
USE OF PROCEEDS
The net proceeds from the sale of Common Stock in the Conversion are
estimated to be between $257.4 million and $349.2 million ($402.1 million
assuming a 15% increase in the Estimated Valuation Range), depending on the
number of shares sold and the expenses of the Conversion. See "Pro Forma
Data." The Company will purchase all of the capital stock of the Bank to be
issued in the Conversion in exchange for 50% of the net Conversion proceeds and
will retain the remaining 50% of the net proceeds as its initial
capitalization. The Company intends to use a portion of the net proceeds
retained by it to make a loan directly to the ESOP to enable the ESOP to
purchase up to 8% of the Common Stock. The amount of the loan is expected to
be between $21.0 million and $28.5 million at the minimum and maximum of the
Estimated Valuation Range, respectively. See "Management of the Company -
Benefits - Employee Stock Ownership Plan." The remaining net proceeds retained
by the Company initially may be used to invest in U.S. Government and federal
agency securities of various maturities, mortgage-backed, mortgage-related or
other securities, deposits in either the Bank or other financial institutions,
or a combination thereof. Ultimately, the portion of net proceeds retained by
the Company may be used to support the Bank's lending activities, to support
the future expansion of operations through establishment of additional branch
offices or other customer facilities, acquisitions of other financial service
organizations, such as other savings institutions and commercial banks
(although no such transactions are specifically being considered at this time),
and for other business and investment purposes, including the payment of
regular cash dividends and possible repurchases of the Company's Common Stock.
See "Dividend Policy." Funds contributed to the Bank from the Company will be
used for general business purposes. The proceeds will be used to support the
Bank's lending and investment activities and thereby enhance the Bank's
capabilities to serve the borrowing and other financial needs of the
communities it serves. See "Use of Proceeds."
DIVIDENDS
Following consummation of the Conversion, the Board of Directors of
the Company intends to consider implementation of a policy of paying quarterly
cash dividends on the Common Stock. However, there has been no determination
made at this point in time as to the initial rate of dividend, if any, to be
paid on the Common Stock. Declarations of dividends by the Company's Board of
Directors will depend upon a number of factors, including the amount of the net
proceeds retained by the Company in the Conversion, investment opportunities
available to the Company or the Bank, capital requirements, the Company's and
the Bank's
10
<PAGE> 50
financial condition and results of operations, tax considerations, statutory
and regulatory limitations, and general economic conditions. There can be no
assurances that dividends will in fact be paid on the Common Stock or that, if
paid, such dividends will not be reduced or eliminated in future periods. For
a more detailed discussion of the factors that may affect the payment of
dividends, see "Dividend Policy."
MARKET FOR COMMON STOCK
The Company has never issued capital stock to the public and,
consequently, there is no existing market for the Common Stock. The Company
has applied to have the Common Stock listed on the NYSE under the symbol
"SIB." No assurance can be given that an active and liquid trading market
for the Common Stock will develop. Further, no assurance can be given that
purchasers will be able to sell their shares at or above the Purchase Price
after the Conversion. See "Risk Factors -- Absence of Market for the Common
Stock" and "Market for Common Stock."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors that should be
considered by prospective investors, including, among other factors, the
potential for a low return on equity following the Conversion and the
uncertainty as to future growth opportunities, the charitable foundation to be
established by the Bank in connection with the Conversion, the potential
effects of changes in interest rates and the current interest rate environment,
risks related to commercial real estate loans, construction and land loans and
commercial business loans competition, the Bank's geographic concentration of
loans, certain anti-takeover provisions, recent legislation affecting the
deduction for bad debt reserves, regulatory oversight, the absence of a market
for the Common Stock, a possible increase in the number of shares issued in the
Conversion, the possible dilutive effect of the issuance of additional shares
of Common Stock, potential increased compensation expenses after the
Conversion, possible adverse tax consequences of the distribution of
subscription rights to purchase the Common Stock and the potential delay in
consummation of the Conversion and the irrevocability of orders.
11
<PAGE> 51
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
(Dollars in Thousands)
The following selected historical consolidated financial data for the
five years ended December 31, 1996 is derived in part from the audited
consolidated financial statements of the Bank. The historical consolidated
financial data for the four months ended April 30, 1997 and 1996 is derived
from unaudited consolidated financial statements. The unaudited consolidated
financial statements include all adjustments, consisting of normal recurring
accruals, which management of the Bank considers necessary for a fair
presentation of the financial position and the results of operations for these
periods. Operating results for the four months ended April 30, 1997 are not
necessarily indicative of the results that may be expected for any other
interim period or the entire year ending December 31, 1997. The selected
historical consolidated financial data set forth below should be read in
conjunction with, and is qualified in its entirety by, the historical
consolidated financial statements of the Bank, including the related notes,
included elsewhere herein.
<TABLE>
<CAPTION>
Four Months Ended
April 30, December 31,
------------------------ ---------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets . . . . . . . . . . . $1,848,295 $1,735,585 $1,782,323 $1,728,130 $1,376,220 $1,365,543 $1,333,646
Cash and cash equivalents . . . . 113,744 57,594 52,622 77,263 29,984 44,155 54,405
Securities held to maturity . . . -- -- -- -- 321,263 310,460 785,823
Securities available for sale . . 677,486 783,556 703,134 788,622 378,207 463,176 --
Securities trading . . . . . . . . 14,406 -- -- -- -- -- --
Loans receivable, net . . . . . . 976,501 825,903 968,015 801,137 608,954 513,803 454,982
Intangible assets(1) . . . . . . . 19,798 21,875 20,490 22,633 492 1,028 1,564
Deposit accounts . . . . . . . . . 1,606,793 1,548,410 1,577,748 1,535,617 1,225,918 1,223,708 1,221,582
Borrowings . . . . . . . . . . . . 30,043 45 54 46 47 49 50
Net worth . . . . . . . . . . . . 177,295 150,977 171,080 150,082 125,444 118,619 98,516
<CAPTION>
Four Months Ended
April 30, Year Ended December 31,
------------------------- ---------------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
----------- ---------- ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Interest income . . . . . . . . . $ 42,925 $ 39,206 $ 124,430 $ 104,356 $ 90,284 $ 93,152 $ 96,057
Interest expense . . . . . . . . . 16,903 16,743 50,437 44,234 36,537 38,327 49,454
----------- ---------- ---------- ----------- ----------- ---------- ----------
Net interest income . . . . . . . 26,022 22,463 73,993 60,122 53,747 54,825 46,603
Provision for possible loan losses 4,667 -- 1,000 -- 76 1,335 2,271
----------- ---------- ---------- ----------- ----------- ---------- ----------
Net interest income after
provision for possible loan
losses . . . . . . . . . . . . . 21,355 22,463 72,993 60,122 53,671 53,490 44,332
Other income . . . . . . . . . . . 1,864 2,249 3,929 4,040 2,048 3,307 1,456
Other expenses . . . . . . . . . . 14,752 13,129 40,066 32,953 25,557 24,873 23,467
----------- ---------- ---------- ----------- ----------- ---------- ----------
Income before provision for income
taxes . . . . . . . . . . . . . 8,467 11,583 36,856 31,209 30,162 31,924 22,321
Provision for income taxes . . . . 1,579 4,715 15,081 13,284 13,958 14,150 9,746
----------- ---------- ---------- ----------- ----------- ---------- ----------
Income before cumulative effect of
accounting change . . . . . . . 6,888 6,868 21,775 17,925 16,204 17,774 12,575
Cumulative effect of change in
accounting for income taxes . . -- -- -- 4,700 -- 1,514 --
----------- ---------- ---------- ----------- ----------- ---------- ----------
Net income . . . . . . . . . . . . $ 6,888 $ 6,868 $ 21,775 $ 13,225 $ 16,204 $ 16,260 $ 12,575
=========== ========== ========== =========== =========== ========== ==========
<CAPTION>
KEY OPERATING RATIOS:
At or For the Four
Months At or For the Year Ended December 31,
Ended April 30, ------------------------------------------------------
---------------------
1997 1996 1996 1995 1994 1993 1992
------- ------- ------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
PERFORMANCE RATIOS:(2)
Return on average assets . . . . . . 1.15% 1.21% 1.24% 0.88% 1.17% 1.21% 1.00%
Return on average equity . . . . . . 12.11 13.86 14.03 9.54 13.27 15.17 14.00
Average interest-earning assets to
average interest-bearing
liabilities . . . . . . . . . . . . 118.89 118.97 120.24 117.17 113.05 110.61 108.55
Interest rate spread(3) . . . . . . . 4.02 3.62 3.84 3.63 3.64 3.91 3.48
Net interest margin(3) . . . . . . . 4.58 4.21 4.46 4.16 4.00 4.22 3.82
Noninterest expenses, exclusive of
amortization of intangible assets,
to assets . . . . . . . . . . . . . 2.35 2.19 2.16 2.11 1.81 1.82 1.81
ASSET QUALITY RATIOS:
Nonperforming assets to total assets
at end of period(4) . . . . . . . . 1.39% 1.60% 1.34% 1.44% 0.61% 0.62% 0.48%
Allowance for loan losses to
nonperforming loans at end of
period . . . . . . . . . . . . . . 60.16 40.84 43.85 44.20 38.79 41.21 48.86
Allowance for loan losses to total
loans at end of period . . . . . . 1.48 1.34 1.02 1.32 0.51 0.62 0.50
CAPITAL AND OTHER RATIOS:
Average equity to average assets . . 9.52% 8.78% 8.85% 9.21% 8.84% 8.00% 7.11%
Tangible equity to assets at end of
period . . . . . . . . . . . . . . 8.33 7.50 8.22 7.09 9.55 8.40 7.34
Total capital to risk-weighted
assets . . . . . . . . . . . . . . 21.11 19.58 20.66 19.65 17.16 16.30 13.78
</TABLE>
- ------------------------------
(1) Consists of excess of cost over fair value of net assets acquired
("goodwill") and core deposit intangibles which amounted to $14.7
million and $5.1 million at April 30, 1997, respectively.
(2) With the exception of end of period ratios, all ratios are based on
average daily balances during the respective periods and are
annualized where appropriate.
(3) Interest rate spread represents the difference between the weighted
average yield on interest-earning assets and the weighted average cost
of interest-bearing liabilities; net interest margin represents net
interest income as a percentage of average interest-earning assets.
(4) Nonperforming assets consist of non-accrual loans, accruing loans more
than 90 days past due and real estate acquired through foreclosure or
by deed-in-lieu thereof.
12
<PAGE> 52
RISK FACTORS
The following risk factors, in addition to those discussed elsewhere
in this Prospectus, should be carefully considered by investors in deciding
whether to purchase the Common Stock offered hereby.
POTENTIAL LOW RETURN ON EQUITY FOLLOWING THE CONVERSION; UNCERTAINTY AS TO
FUTURE GROWTH OPPORTUNITIES
At April 30, 1997, the Bank's ratio of equity to assets was 9.6%. The
Company's equity position will be significantly increased as a result of the
Conversion. On a pro forma basis as of April 30, 1997, assuming the sale of
Common Stock at the midpoint of the Estimated Valuation Range, the Company's
ratio of equity to assets would be 21.2%. The Company's ability to leverage
this capital will be significantly affected by industry competition for loans
and deposits. The Company currently anticipates that it will take time to
prudently deploy such capital. As a result, the Company's return on equity
initially is expected to be below the industry average after the Conversion.
In an effort to fully deploy post-Conversion capital, in addition to
attempting to increase its loan and deposit growth, the Company may seek to
expand its banking franchise by acquiring other financial institutions or
branches in the New York metropolitan area and/or New Jersey. The Company's
ability to grow through selective acquisitions of other financial institutions
or branches of such institutions will be dependent on successfully identifying,
acquiring and integrating such institutions or branches. There can be no
assurance the Company will be able to generate internal growth or to identify
attractive acquisition candidates, acquire such candidates on favorable terms
or successfully integrate any acquired institutions or branches into the
Company. Neither the Company nor the Bank has any specific plans, arrangements
or understandings regarding any such expansions or acquisitions at this time,
nor have criteria been established to identify potential candidates for
acquisition.
ESTABLISHMENT OF THE FOUNDATION
Pursuant to the Plan, the Company intends to voluntarily establish a
charitable foundation in connection with the Conversion. The Plan provides
that the Bank and the Company will establish the Foundation, which will be
incorporated under Delaware law as a nonstock corporation and will be funded
with shares of Common Stock contributed by the Company. The contribution of
Common Stock to the Foundation will be dilutive to the interests of
stockholders and will have an adverse impact on the reported earnings of the
Company in 1997, the year in which the Foundation will be or is to be
established.
Dilution of Stockholders' Interests. The Company proposes to fund the
Foundation with Common Stock of the Company in an amount equal to 5.0% of the
Common Stock to be sold in the Conversion. At the minimum, midpoint and
maximum of the Estimated Valuation Range, the contribution to the Foundation
would equal 1,315,476, 1,547,619 and 1,779,762 shares of
13
<PAGE> 53
Common Stock, with a value of $13.2 million, $15.5 million and $17.8 million,
respectively, based on the Purchase Price. Assuming the sale of Common Stock
at the maximum of the Estimated Valuation Range, upon completion of the
Conversion and establishment of the Foundation, the Company will have
37,375,000 shares issued and outstanding of which the Foundation will own
1,779,762 shares of Common Stock, or 4.8%. As a result, persons purchasing
shares of Common Stock in the Conversion will have their ownership and voting
interests in the Company diluted by 4.8%. See "Pro Forma Data."
Impact on Earnings. The contribution of Common Stock to the
Foundation will have an adverse impact on the Company's and the Bank's earnings
in the year in which the contribution is made. The Company will recognize the
full expense in the amount of the contribution of Common Stock to the
Foundation in the quarter in which it occurs, which is expected to be the
fourth quarter of 1997. The amount of the contribution will range from $13.2
million to $17.8 million, based on the minimum and maximum of the Estimated
Valuation Range, respectively. The contribution expense will be partially
offset by the tax benefit related to the expense. The Company and the Bank
have been advised by their independent tax advisors that the contribution to
the Foundation will be tax deductible, subject to an annual limitation based on
10% of the Company's annual taxable income. Assuming a contribution of $17.8
million in Common Stock (based on the maximum of the Estimated Valuation
Range), the Company estimates a net tax effected expense of $9.4 million (based
on a 47% marginal tax rate). If the Foundation had been established at
December 31, 1996, the Bank would have reported net income of $12.4 million for
the year ended December 31, 1996 rather than reporting net income of $21.8
million. Management cannot predict earnings for 1997, but expects that the
establishment and funding of the Foundation will have an adverse impact on the
Company's earnings for such year. However, in light of the expected
contribution to the Foundation, the Bank does not expect in the future to make
other than nominal charitable contributions within the communities it serves.
In addition, the Company and the Bank do not currently anticipate making
additional contributions to the Foundation within the first five years
following the initial contribution.
Tax Considerations. The Company and the Bank have been advised by
their independent tax advisors that an organization created for the
above-described purposes would qualify as a Section 501(c)(3) exempt
organization under the Internal Revenue Code of 1986, as amended (the "Code"),
and would be classified as a private foundation. The Foundation will submit a
request to the Internal Revenue Service ("IRS") to be recognized as an exempt
organization. The Company and the Bank have received an opinion of their
independent tax advisors that the Foundation would qualify as a Section
501(c)(3) exempt organization under the Code, except that such opinion does not
consider the impact of the condition expected to be required by regulatory
authorities that Common Stock issued to the Foundation be voted in the same
ratio as all other shares of the Company's Common Stock on all proposals
considered by stockholders of the Company. See "The Conversion--Establishment
of the Foundation--Regulatory Conditions Imposed on the Foundation."
Consistent with this condition, in the event that the Company or the Foundation
receives an opinion of its legal counsel that compliance with the voting
restriction would (i) cause a violation of Delaware law and the OTS determines
that federal law would not preempt the application of the laws of Delaware to
the Foundation, (ii) have the effect of causing
14
<PAGE> 54
the Foundation to lose its tax-exempt status, or otherwise have a material and
adverse tax consequence on the Foundation or (iii) subject the Foundation to an
excise tax under Section 4941 of the Code, the OTS shall waive such voting
restriction upon submission of a legal opinion by the Company or the Foundation
that is satisfactory to the OTS. The independent tax advisors' opinion further
provides that there is substantial authority for the position that the
Company's contribution of its own stock to the Foundation would not constitute
an act of self-dealing, and that the Company would be entitled to a deduction
in the amount of the fair market value of the stock at the time of the
contribution, subject to an annual limitation based on 10% of the Company's
annual taxable income. The Company, however, would be able to carry forward
any unused portion of the deduction for five years following the contribution.
Thus, while the Company would have received a tax benefit of approximately $8.4
million in 1996 (based upon the sale of stock at the maximum of the Estimated
Valuation Range and a contribution of $17.8 million of Common Stock and the
Bank's pre-tax income for 1996), the Company is permitted under the Code to
carry over the excess contribution in the five following years. Assuming the
sale of Common Stock at the maximum of the Estimated Valuation Range, the
Company estimates that for federal income tax purposes, a substantial portion
of the deduction should be deductible over the six-year period. Although the
Company and the Bank have received an opinion of their independent tax advisors
that the Company will be entitled to the deduction of the charitable
contribution, there can be no assurances that the IRS will recognize the
Foundation as a Section 501(c)(3) exempt organization or that the deduction
will be permitted. In such event, the Company's tax benefit related to the
Foundation would have to be fully expensed, resulting in further reduction in
earnings in the year in which the IRS makes such a determination.
Comparison of Valuation and Other Factors Assuming the Foundation is
Not Established as Part of the Conversion. The establishment of the Foundation
was taken into account by RP Financial in determining the estimated pro forma
market value of the Common Stock. The aggregate price of the shares of Common
Stock being offered in the Subscription and Community Offerings is based upon
the independent appraisal conducted by RP Financial of the estimated pro forma
market value of the Common Stock. The pro forma aggregate price of the Common
Stock being offered for sale in the Conversion is currently estimated to be
between $263.1 million and $356.0 million, with a midpoint of $309.5 million.
The pro forma price to book ratio and the pro forma price to annualized
earnings ratio, at and for the four months ended April 30, 1997, are 72.1% and
11.11x, respectively, at the midpoint of the Estimated Valuation Range. In the
event that the Conversion did not include the Foundation, RP Financial has
estimated that the estimated pro forma market value of the Common Stock would
be $335.0 million at the midpoint based on a pro forma price to book ratio and
the pro forma price to earnings ratio at 71.9% and 11.49x, respectively. The
amount of Common Stock that would be offered in the Conversion at the midpoint
of the Estimated Valuation Range is approximately $25.5 million less than the
estimated amount of Common Stock that would be offered in the Conversion
without the Foundation based on the estimate provided by RP Financial.
Accordingly, certain account holders of the Bank who subscribe to purchase
Common Stock in the Subscription Offering would receive fewer shares depending
on the size of a depositor's stock order and the amount of his or her
qualifying deposits in the Bank and the overall level of subscriptions. See
15
<PAGE> 55
"Comparison of Valuation and Pro Forma Information with No Foundation." This
estimate by RP Financial was prepared solely for purposes of providing Eligible
Account Holders and subscribers with information with which to make an informed
decision on the Conversion.
The decrease in the amount of Common Stock being offered as a result
of the contribution of Common Stock to the Foundation will not have a
significant effect on the Company or the Bank's capital position. The Bank's
regulatory capital is in excess of its regulatory capital requirements and will
further exceed such requirements following the Conversion. The Bank's
tangible, core and risk-based capital ratios at April 30, 1997 would be 14.0%,
15.0% and 31.35%, respectively. On a consolidated basis, the Company's pro
forma stockholders' equity would be $450.7 million, or approximately 21.2% of
pro forma consolidated assets, assuming the sale of shares at the midpoint of
the Estimated Valuation Range. Pro forma stockholders' equity per share and
pro forma net earnings per share would be $13.87 and $0.30, respectively. If
the Foundation was not being established in the Conversion, based on the RP
Financial estimate, the Company's pro forma stockholders' equity would be
approximately $465.6 million, or approximately 21.8% of pro forma consolidated
assets at the midpoint of the Estimated Valuation Range, and pro forma
stockholders' equity per share and pro forma net earnings per share would be
substantially similar with the Foundation as without the establishment of the
Foundation. See "Comparison of Valuation and Pro Forma Information with No
Foundation."
Potential Anti-Takeover Effect. Upon completion of the Conversion,
the Foundation will own 4.8% of the total shares of the Common Stock
outstanding. Such shares will be owned solely by the Foundation; however,
pursuant to a condition expected to be required by regulatory authorities, it
is anticipated that the shares of Common Stock held by the Foundation will be
voted in the same ratio as all other shares of the Common Stock on all
proposals considered by the stockholders of the Company. As such, the Company
does not believe the Foundation will have an anti-takeover effect on the
Company. However, in the event that the OTS were to waive this voting
restriction for the reasons described herein as provided in the condition, the
Foundation's Board of Directors would exercise sole voting power over such
shares and would no longer be subject to the restriction. See "The
Conversion--Establishment of the Foundation--Regulatory Conditions Imposed on
the Foundation." As a majority of the Foundation's Board of Directors will be
comprised of the members of the Board of Directors, in the event the OTS waived
the voting restriction, management of the Company and the Bank may benefit to
the extent that the Board of Directors of the Foundation determines to vote the
shares of Common Stock held by the Foundation in favor of proposals supported
by the Company and the Bank. Furthermore, in such an event, when the
Foundation's shares are combined with shares purchased directly by officers and
directors of the Company, shares expected to be held by the Recognition Plan,
and shares held by the ESOP trust, the aggregate of such shares will exceed 20%
of the outstanding Common Stock, which could enable management to defeat
stockholder proposals requiring 80% approval. Consequently, such potential
voting control might preclude takeover attempts that certain stockholders deem
to be in their best interest, and might tend to perpetuate management.
However, since the ESOP shares are allocated to all eligible employees of the
Bank, and any unallocated shares will be voted by the trustees in the same
proportions as allocated shares are voted, and because the Recognition Plan
must first be
16
<PAGE> 56
approved by stockholders no sooner than six months following completion of the
Conversion, and awards under such proposed plans may be granted to employees
other than executive officers and directors, management of the Company does not
expect to have voting control of all shares covered by the ESOP and other
stock-based benefit plans. See"--Certain Anti-Takeover Provisions--Voting
Control of Directors and Executive Officers." Moreover, as the Foundation sells
its shares of Common Stock over time, its ownership interest and voting power
in the Company is expected to decrease.
Potential Challenges. To date, there has been limited precedent with
respect to the establishment and funding of a charitable foundation as part of
a conversion of a mutual savings institution to stock form. As such, the
Foundation and the OTS's non-objection to the Conversion may be subject to
potential challenges notwithstanding that the Board of Trustees of the Bank and
the Board of Directors of the Company have carefully considered the various
factors involved in the establishment of the Foundation in reaching their
determination to establish the Foundation as part of the Conversion. See "The
Conversion--Establishment of the Charitable Foundation--Purpose of the
Foundation." If challenges were to be instituted seeking to require the Bank
and the Company to eliminate establishment of the Foundation in connection with
the Conversion, no assurances can be made that the resolution of such
challenges would not result in a delay in the consummation of the Conversion or
that any objecting persons would not be ultimately successful in obtaining such
removal or other relief against the Bank and the Company. In addition, if the
Bank and the Company are forced to eliminate the Foundation, the Company may be
required to resolicit subscribers in the Offerings.
Approval of Members. Establishment of the Foundation is subject to
the approval of a majority of the total outstanding votes of the Bank's members
eligible to be cast at the Special Meeting. The Foundation will be considered
as a separate matter from approval of the Plan of Conversion. If the Bank's
members approve the Plan of Conversion, but not the establishment of the
Foundation, the Bank intends to complete the Conversion without the
establishment of the Foundation. Failure to approve the Foundation may
materially increase the pro forma market value of the Common Stock being
offered for sale in the Offering since the Estimated Valuation Range, as set
forth herein, takes into account the proposed contribution to the Foundation.
If the pro forma market value of the Company without the Foundation is either
greater than $409.3 million or less than $263.1 million or if the OTS otherwise
requires a resolicitation of subscribers, the Bank will establish a new
Estimated Valuation Range and commence a resolicitation of subscribers (i.e.,
subscribers will be permitted to continue their orders, in which case they will
need to affirmatively reconfirm their subscriptions prior to the expiration of
the resolicitation offering or their subscription funds will be promptly
refunded with interest.) Any change in the Estimated Valuation Range must be
approved by the OTS. See "The Conversion - Stock Pricing and Number of Shares
to be Issued."
POTENTIAL EFFECTS OF CHANGES IN INTEREST RATES AND THE CURRENT INTEREST RATE
ENVIRONMENT
The operations of the Bank are substantially dependent on its net
interest income, which is the difference between the interest income earned on
its interest-earning assets and the interest
17
<PAGE> 57
expense paid on its interest-bearing liabilities. Like most savings
institutions, the Bank's earnings are affected by changes in market interest
rates, and other economic factors beyond its control. While the Bank's average
interest rate spread increased from 3.64% for 1994 to 3.84% for 1996 and 4.02%
for the four months ended April 30, 1997, no assurance can be given that the
Bank's average interest rate spread will not decrease in future periods. Any
such decrease in the Bank's average interest rate spread could adversely affect
the Bank's net interest income. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Results of Operations."
If an institution's interest-earning assets have longer effective
maturities than its interest-bearing liabilities, the yield on the
institution's interest-earning assets generally will adjust more slowly than
the cost of its interest-bearing liabilities and, as a result, the
institution's net interest income generally would be adversely affected by
material and prolonged increases in interest rates and positively affected by
comparable declines in interest rates. The Bank attempts to reduce the
vulnerability of its operations to changes in interest rates by maintaining
significant amounts of assets with relatively short terms and/or adjustable
rates of interest. Based upon certain repricing assumptions, the Bank's
interest-earning liabilities repricing or maturing within one year exceeded its
interest-bearing assets with similar characteristics by $127.3 million or 6.9%
of total assets. Accordingly, an increase in interest rates generally would
result in a decrease in the Bank's average interest rate spread and net
interest income. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Asset and Liability Management."
In addition to affecting interest income and expense, changes in
interest rates also can affect the value of the Bank's interest-earning assets,
which are comprised of fixed and adjustable-rate instruments, and the ability
to realize gains from the sale of such assets. Generally, the value of
fixed-rate instruments fluctuates inversely with changes in interest rates. At
April 30, 1997, the Bank had $677.5 million of securities available for sale
($385.9 million of which had fixed-rates of interest) and the Bank had $3.5
million of net unrealized gains with respect to such securities, which were
included as a separate component in the Bank's total net worth, net of tax, as
of such date.
The OTS has implemented an interest rate risk component into its
risk-based capital rules, which is designed to calculate on a quarterly basis
the extent to which the value of an institution's assets and liabilities would
change if interest rates increase or decrease. If the net portfolio value of
an institution would decline by more than 2% of the estimated market value of
the institution's assets in the event of a 200 basis point increase or decrease
in interest rates, then the institution is deemed to be subject to a greater
than "normal" interest rate risk and must deduct from its capital 50% of the
amount by which the decline in net portfolio value exceeds 2% of the estimated
market value of the institution's assets, as of an effective date to be
determined. As of April 30, 1997, if interest rates increased or decreased by
200 basis points, the Bank's net portfolio value would decrease by 18.5% and
increase by 6.6%, respectively, of the estimated market value of the Bank's
portfolio equity, as calculated by the OTS. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Asset and Liability
Management." As a result of such interest rate risk, the Bank could be
required to deduct $4.7
18
<PAGE> 58
million from its total regulatory capital if certain regulations were
applicable, although even with such deduction the Bank would continue to be
deemed "well-capitalized." See "Regulation - Regulation of Federal Savings
Banks - Regulatory Capital Requirements."
Changes in interest rates also can affect the average life of loans
and mortgage-related securities. Decreases in interest rates in recent periods
have resulted in increased prepayments of loans and mortgage-backed securities,
as borrowers refinanced to reduce borrowing costs. Under these circumstances,
the Bank is subject to reinvestment risk to the extent that it is not able to
reinvest such prepayments at rates which are comparable to the rates on the
maturing loans or securities. See "Business - Lending Activities."
RISKS RELATED TO COMMERCIAL REAL ESTATE LOANS, CONSTRUCTION AND LAND LOANS AND
COMMERCIAL BUSINESS LOANS
As a result of its acquisition of Gateway in August 1995, the Bank has
become more active in originating commercial real estate loans, construction
and land loans and commercial business loans, which amounted to $112.3 million
(or 11.5% of the Bank's net loan portfolio), $31.4 million (or 3.2% of the net
loan portfolio) and $8.3 million (or 0.9% of the net loan portfolio),
respectively.
Commercial real estate and construction and land lending generally is
considered to involve a higher degree of risk than singe-family residential
lending due to a variety of factors, including generally larger loan balances,
the dependency on successful operation of the project for repayment, loan terms
which often do not require full amortization of the loan over its term and to
successfully develop and/or sell the property. In addition, risk of loss on a
construction loan is dependent largely upon the accuracy of the initial
estimate of the property's value at completion of construction or development
and the estimated cost (including interest) of construction. During the
construction phase, a number of factors could result in delays and cost
overruns. If the estimate of value proves to be inaccurate, the Bank may be
confronted, at or prior to the maturity of the loan, with a project, when
completed, having a value which is insufficient to assure full repayment.
Commercial business loans are generally considered to involve a higher degree
of risk than residential mortgage loans because the collateral may be in the
form of intangible assets and/or inventory subject to market obsolescence.
Commercial business loans may involve large loan balances to single borrowers
or groups of related borrowers, with the repayment of such loans typically
dependent on the successful operations and income stream of the borrower. Such
risks can be significantly affected by economic conditions. In addition,
commercial business lending generally requires substantially greater oversight
efforts compared to residential real estate lending. See "Business - Lending
Activities - Other Loans." As of April 30, 1997, the Bank had $8.9 million of
non-performing commercial real estate loans, $2.7 million of non-performing
construction and land loans and $300,000 of non-performing commercial business
loans. See "Business - Asset Quality - Non-Performing Assets." The Bank
recently has hired two additional commercial lending officers and the Bank
generally intends to increase the amounts of its originations of commercial
real estate loans, construction and land loans and commercial business loans.
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STRONG COMPETITION WITHIN THE BANK'S MARKET AREA
Competition in the banking and financial services industry is intense.
In its market area, the Bank competes with commercial banks, savings
institutions, mortgage brokerage firms, credit unions, finance companies,
mutual funds, insurance companies, and brokerage and investment banking firms
operating locally and elsewhere. Many of these competitors have substantially
greater resources and lending limits than the Bank and may offer certain
services that the Bank does not or cannot provide. The profitability of the
Bank depends upon its continued ability to successfully compete in its market
area.
GEOGRAPHIC CONCENTRATION OF LOANS
The Bank's market area consists primarily of Staten Island and
Brooklyn, New York and, to a lesser extent, the other areas of the New York
City metropolitan area and northern New Jersey. The Bank's real estate loans
are primarily secured by properties located in its market area and all of the
Bank's loans are primarily made to residents of its market area. Accordingly,
the asset quality of the Bank's loan portfolio is highly dependent upon the
economy and the unemployment rate in its market area. While the Staten Island
economy generally has been stable in recent years, there is still potential for
a significant degree of volatility in the local economy due to a continued
heavy reliance on the economic conditions in Manhattan and the securities and
financial services industries headquartered therein. No assurance can be given
that downturns in the economy in the Bank's market area may not adversely
affect the Bank's operations in the future. See "Business - Market Area and
Competition."
CERTAIN ANTI-TAKEOVER PROVISIONS
PROVISIONS IN THE COMPANY'S GOVERNING INSTRUMENTS AND DELAWARE LAW.
Certain provisions of the Company's Certificate of Incorporation and Bylaws, as
well as certain provisions in Delaware law, will assist the Company in
maintaining its status as an independent publicly-owned corporation.
Provisions in the Company's Certificate of Incorporation and Bylaws provide,
among other things, (i) that the Board of Directors of the Company shall be
divided into three classes; (ii) that special meetings of stockholders may only
be called by the Board of Directors of the Company; (iii) that stockholders
generally must provide the Company advance notice of stockholder proposals and
nominations for director and provide certain specified related information;
(iv) noncumulative voting for the election of directors; (v) that no person may
acquire more than 10% of the issued and outstanding shares of any class of
equity security of the Company; (vi) the authority to issue shares of
authorized but unissued Common Stock and preferred stock and to establish the
terms of any one or more series of Preferred Stock, including voting rights
(which may be waived by the Board of Directors under certain circumstances) and
(vii) supermajority voting requirements with respect to certain business
transactions involving the Company. Provisions under Delaware law applicable
to the Company provide, among other things, that the Company may not engage in
a business combination with an "interested shareholder" (generally a holder of
15% of a corporation's voting stock) during the three-year period after the
interested shareholder became such except under certain specified
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circumstances. In addition, OTS regulations prohibit, for a period of one year
following the date of Conversion, offers to acquire or the acquisition of
beneficial ownership of more than 10% of the outstanding voting stock of the
Company. The above provisions may discourage potential proxy contests and
other potential takeover attempts, particularly those which have not been
negotiated with the Board of Directors, and thus generally may serve to
perpetuate current management. See "Restrictions on Acquisition of the Company
and the Bank."
VOTING CONTROL OF OFFICERS AND DIRECTORS. Directors and executive
officers of the Company expect to purchase approximately 1.9% or 1.4% of the
shares of Common Stock outstanding based upon the minimum and the maximum of
the Estimated Valuation Range, respectively, to be sold in the Offerings. See
"Proposed Management Purchases." The directors who act as trustees of the ESOP
are also expected to immediately control the voting of 8% of the shares of
Common Stock issued in the Conversion through the ESOP, at least until an
allocation has been made under the ESOP. Under the terms of the ESOP, after an
allocation has been made, the unallocated shares will be voted by the trustees
in the same proportion as the allocated shares are voted by the ESOP
participants.
The Company intends to seek stockholder approval of the Company's
proposed Recognition Plan, which is a non-tax-qualified restricted stock plan
for the benefit of directors, officers and employees of the Company and the
Bank. Assuming the receipt of stockholder approval, which stockholder approval
cannot be obtained earlier than six months following the Conversion pursuant to
regulations of the OTS, the Company expects to acquire Common Stock on behalf
of the Recognition Plan, in an amount equal to 4% of the Common Stock issued in
the Conversion, or 1,052,381 shares and 1,423,809 shares at the minimum and
maximum of the Estimated Valuation Range, respectively. These shares will be
acquired either through open market purchases, if permissible, or from
authorized but unissued Common Stock. Under the terms of the Recognition Plan,
recipients of awards will be entitled to instruct the trustee of the
Recognition Plan as to how the underlying shares should be voted, and the
trustee will be entitled to vote all unallocated shares in its discretion. If
the shares are purchased in the open market, directors and executive officers
would have effective control over 5.6% or 3.8% of the Common Stock outstanding
(including the shares to be issued to the Foundation) at such time based upon
the minimum and the maximum of the Estimated Valuation Range, respectively,
before giving effect to the potential exercise of any stock options by
directors and officers of the Company and the Bank, and shares held by the
ESOP. If approved by stockholders at a meeting held no earlier than six months
following the Conversion, the Company intends to reserve for future issuance
pursuant to the Stock Option Plan a number of authorized shares of Common Stock
equal to an aggregate of 10% of the Common Stock issued in the Conversion
(3,559,523 shares, based on the issuance of the maximum 35,595,238 shares).
See "Management - Management of the Bank - Benefits." Management's potential
voting control could, together with additional stockholder support, preclude or
make more difficult takeover attempts that certain stockholders deem to be in
their best interest and may tend to perpetuate existing management.
PROVISIONS OF STOCK BENEFIT PLANS AND EMPLOYMENT AGREEMENTS. The ESOP
provides for accelerated vesting in the event of a change in control. In
addition, upon consummation of
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the Conversion, the Company and the Bank will enter into employment agreements
with the Bank's Chairman and Chief Executive Officer, its President and Chief
Operating Officer and with the Other Senior Officers, which agreements will
provide for severance pay in the event of a change in control. These
provisions may have the effect of increasing the cost of acquiring the Company,
thereby discouraging future attempts to take over the Company or the Bank. In
addition, it is possible that the Stock Option Plan and the Recognition Plan
may not be implemented until more than one year following completion of the
Conversion, and, in such event, such plans could provide for accelerated
vesting in the event of a change in control of the Company. See "Restrictions
on Acquisition of the Company and the Bank - Restrictions in the Company's
Certificate of Incorporation and Bylaws," "Management of the Company -
Benefits" and "Management of the Bank - Employment Agreements."
LEGISLATION LIMITING DEDUCTION OF BAD DEBT RESERVES
Under Section 593 of the Internal Revenue Code of 1986, as amended
(the "Code"), until the first tax year beginning on or after January 1, 1996,
thrift institutions such as the Bank generally were permitted to establish a
tax reserve for bad debts and to make annual additions thereto, which
additions, within specified limitations, could be deducted in arriving at their
taxable income. The Bank's deduction with respect to "qualifying loans" was
computed using an amount based on the Bank's actual loss experience (the
"Experience Method") or a percentage equal to 8.0% of the Bank's taxable income
(the "PTI Method"). Under recently enacted legislation, the PTI Method was
repealed. As a result, the Bank is permitted to deduct only actual bad debts
as they occur and cannot utilize the percentage of taxable income method to
make additions to its bad debt reserves in the future to reduce its effective
tax rate. In addition, the Bank is required to recapture for tax purposes (i.e.
take into income) over a six year period the excess of the balance of its bad
debt reserves as of December 31, 1995 over the balance of such reserves as of
December 31, 1987. The Bank's excess amounted to $8.4 million (for which
deferred taxes have been provided). However, under the legislation, such
recapture requirements would be suspended for each of two successive taxable
years beginning January 1, 1996, in which the Bank originates a minimum amount
of certain residential loans based upon the average of the principal amounts of
such loans made by the Bank during its six taxable years preceding 1996. See
"Taxation - Federal Taxation."
REGULATORY OVERSIGHT AND LEGISLATION
The Bank is subject to extensive regulation, supervision and
examination by the OTS, as its chartering authority, and by the FDIC as insurer
of its deposits up to applicable limits. The Bank is a member of the FHLB
System and is subject to certain limited regulations promulgated by the FRB.
As the holding company of the Bank, the Company also will be subject to
regulation and oversight by the OTS. Such regulation and supervision govern
the activities in which an institution can engage and are intended primarily
for the protection of the insurance fund and depositors. Regulatory
authorities have been granted extensive discretion in connection with their
supervisory and enforcement activities which are intended to strengthen the
financial condition of the banking and thrift industries, including the
imposition of restrictions on the
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operation of an institution, the classification of assets by the institution
and the adequacy of an institution's allowance for loan losses. Any change in
such regulation and oversight, whether by the OTS, the FDIC or Congress, could
have a material impact on the Company, the Bank and their respective
operations. See "Regulation."
On September 30, 1996, the Deposit Insurance Funds ("DIF") Act of 1996
was enacted into law. The DIF Act contemplates the development of a common
charter for all federally chartered depository institutions and the abolition
of separate charters for national banks and federal savings associations. It
is not known what form the common charter may take and what effect, if any, the
adoption of a new charter would have on the financial condition or results of
operations of the Bank. See "Regulation - Regulation of Federal Savings
Banks."
Legislation is proposed periodically providing for a comprehensive
reform of the banking and thrift industries, and has included provisions that
would (i) require federal savings associations to convert to a national bank or
a state-chartered bank or thrift, (ii) require all savings and loan holding
companies to become bank holding companies and (iii) abolish the OTS. It is
uncertain when or if any of this type of legislation will be passed, and, if
passed, in what form the legislation would be passed. As a result, management
cannot accurately predict the possible impact of such legislation on the Bank.
ABSENCE OF MARKET FOR THE COMMON STOCK
The Company and the Bank have never issued capital stock. Keefe,
Bruyette has been retained to assist in the distribution of the Common Stock on
a "best efforts" basis and is not obligated to purchase any shares of Common
Stock in the Offerings. The Company has applied to have its Common Stock
listed on the NYSE. See "Market for Common Stock." Making a market in
securities involves maintaining bid and ask quotations and being able, as
principal, to effect transactions in reasonable quantities at those quoted
prices, subject to various securities laws and other regulatory requirements.
The development of a public trading market depends upon the existence of
willing buyers and sellers, the presence of which is not within the control of
the Company, the Bank, or any market maker. Because there can be no assurance
that buyers and sellers of the Company's Common Stock can be readily matched,
investors may wish to consider the potential illiquid and long-term nature of
an investment in the Common Stock. There can be no assurance that an active
and liquid trading market for the Common Stock will develop, or once developed,
will continue, nor any assurances that purchasers of the Common Stock will be
able to sell their shares at or above the Purchase Price. The absence of a
liquid and active trading market, or the discontinuance thereof, may have an
adverse effect on both the price and the liquidity of the Common Stock.
POSSIBLE INCREASE IN NUMBER OF SHARES ISSUED IN THE CONVERSION
The number of shares to be sold in the Conversion may be increased as
a result of an increase in the Estimated Valuation Range of up to 15% to
reflect changes in market and financial conditions prior to completion of the
Conversion or to fill the order of the ESOP. In
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the event that the Estimated Valuation Range is so increased, it is expected
that the Company will issue up to 40,934,524 shares of Common Stock at the
Purchase Price for an aggregate price of up to $409.3 million. An increase in
the number of shares will decrease net income per share and stockholders'
equity per share on a pro forma basis and will increase the Company's
consolidated stockholders' equity and net income. Such an increase will also
increase the Purchase Price as a percentage of pro forma stockholders' equity
per share and net income per share.
The ESOP currently intends to purchase 8% of the Common Stock, which
purchase may be increased to up to 10% of the Common Stock. In the event that
the number of shares to be sold in the Conversion are increased as a result of
an increase in the Estimated Valuation Range, the ESOP shall have a first
priority to purchase all of such shares sold in the Conversion in excess of
35,595,238 shares, up to a maximum of 10% of the total number of shares issued
in the Conversion. See "Pro Forma Data" and "The Conversion - Stock Pricing
and Number of Shares to be Issued."
POSSIBLE DILUTIVE EFFECT OF ISSUANCE OF ADDITIONAL SHARES
If the Recognition Plan is approved by stockholders of the Company,
the Recognition Plan intends to acquire an amount of Common Stock equal to 4%
of the shares of Common Stock issued in the Conversion. If such shares are
acquired at a per share price equal to the Purchase Price, the cost of such
shares would be $14.2 million, assuming the Common Stock sold in the Conversion
is equal to the maximum of the Estimated Valuation Range. Such shares of
Common Stock may be acquired in the open market with funds provided by the
Company, if permissible, or from authorized but unissued shares of Common
Stock. In the event that the Recognition Plan acquires authorized but unissued
shares of Common Stock from the Company, the interests of existing stockholders
will be diluted. The issuance of authorized but unissued shares of Common
Stock to such plan in an amount equal to 4% of the Common Stock issued in the
Conversion would dilute the voting interests of existing stockholders by
approximately 3.8%, and net income per share and stockholders' equity per share
would be decreased by a corresponding amount. See "Pro Forma Data" and
"Management - Management of the Bank - Benefits - Recognition Plan."
If the Stock Option Plan is approved by stockholders of the Company,
the Company intends to reserve for future issuance pursuant to such plan a
number of shares of Common Stock equal to an aggregate of 10% of the Common
Stock issued in the Conversion (3,559,523 shares, based on the issuance of the
maximum 35,595,238 shares). Such shares may be authorized but previously
unissued shares, treasury shares or shares purchased by the Company in the open
market or from private sources. If only authorized but previously unissued
shares are used under such plan, the issuance of the total number of shares
available under such plan would dilute the voting interests of existing
stockholders by approximately 9.1%, and net income per share and stockholders'
equity per share would be decreased by a corresponding amount. See "Pro Forma
Data" and "Management - Management of the Bank - Benefits."
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POTENTIAL INCREASED COMPENSATION EXPENSE AFTER THE CONVERSION
In November 1993, the American Institute of Certified Public
Accountants ("AICPA") issued Statement of Position 93-6 entitled "Employers'
Accounting for Employee Stock Ownership Plans" ("SOP 93-6"). SOP 93-6 requires
an employer to record compensation expense in an amount equal to the fair value
of shares committed to be released to employees from an employee stock
ownership plan instead of an amount equal to the cost basis of such shares. If
the shares of Common Stock appreciate in value over time, SOP 93-6 will result
in increased compensation expense with respect to the ESOP as compared with
prior guidance which required the recognition of compensation expense based on
the cost of shares acquired by the ESOP. It is impossible to determine at this
time the extent of such impact on future net income. See "Pro Forma Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Recent Accounting Pronouncements." In addition, after
consummation of the Conversion, the Company intends to implement, subject to
stockholder approval (which approval cannot be obtained earlier than six months
subsequent to the Conversion), the Recognition Plan. Upon implementation, the
release of shares of Common Stock from the Recognition Plan will result in
additional compensation expense. See "Pro Forma Data" and "Management -
Management of the Bank - Benefits - Recognition Plan."
POSSIBLE ADVERSE INCOME TAX CONSEQUENCES OF THE DISTRIBUTION OF SUBSCRIPTION
RIGHTS
The Company and the Bank have received a letter from RP Financial
advising them of its belief that subscription rights granted to Eligible
Account Holders, Supplemental Eligible Account Holders and Other Members have
no value. However, this opinion is not binding on the Internal Revenue Service
("IRS"). If the subscription rights granted to Eligible Account Holders,
Supplemental Eligible Account Holders and Other Members are deemed to have an
ascertainable value, receipt of such rights would be taxable probably only to
those Eligible Account Holders, Supplemental Eligible Account Holders and Other
Members who exercise the subscription rights (either as capital gain or
ordinary income) in an amount equal to such value. Whether subscription rights
are considered to have ascertainable value is an inherently factual
determination. See "The Conversion - Effects of Conversion" and "- Tax
Aspects."
IRREVOCABILITY OF ORDERS; POTENTIAL DELAY IN COMPLETION OF OFFERINGS
Orders submitted in the Subscription Offering, Community Offering
and/or any Syndicated Community Offering are irrevocable. Funds submitted in
connection with any purchase of Common Stock in the Offerings will be held by
the Company until the completion or termination of the Conversion, including
any extension of the Expiration Date. Because, among other factors, completion
of the Conversion will be subject to an update of the independent appraisal
prepared by RP Financial, there may be one or more delays in the completion of
the Conversion. Subscribers will have no access to subscription funds and/or
shares of Common Stock until the Conversion is completed or terminated.
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STATEN ISLAND BANCORP, INC.
The Company was organized in July 1997 at the direction of the Board
of Trustees of the Bank for the purpose of holding all of the capital stock of
the Bank and in order to facilitate the Conversion. The Company has applied
for the approval of the OTS to become a savings and loan holding company and as
such will be subject to regulation by the OTS. After completion of the
Conversion the Company will conduct business initially as a unitary savings and
loan holding company. See "Regulation - Regulation of Savings and Loan Holding
Companies." Upon consummation of the Conversion, the Company will have no
significant assets other than all of the outstanding shares of common stock of
the Bank, the portion of the net proceeds from the Offerings retained by the
Company and the Company's loan to the ESOP, and the Company will have no
significant liabilities. See "Use of Proceeds." Initially, the management of
the Company and the Bank will be substantially identical and the Company will
neither own nor lease any property, but will instead use the premises,
equipment and furniture of the Bank. At the present time, the Company does not
intend to employ any persons other than officers who are also officers of the
Bank, and the Company will utilize the support staff of the Bank from time to
time. Additional employees will be hired as appropriate to the extent the
Company expands or changes its business in the future.
Management believes that the holding company structure will provide
the Company and the Bank with additional flexibility to diversify its business
activities through existing or newly-formed subsidiaries, or through
acquisitions of other entities, including potentially other financial
institutions and financial services related companies. Although there are no
current arrangements, understandings or agreements regarding any such
opportunities or transactions, the Company will be in a position after the
Conversion, subject to regulatory limitations and the Company's financial
position, to take advantage of any such acquisition and expansion opportunities
that may arise. The initial activities of the Company are anticipated to be
funded by the proceeds to be retained by the Company and earnings thereon, as
well as dividends from the Bank. See "Dividend Policy."
The Company's principal executive office is located at the executive
office of the Bank at 15 Beach Street, Staten Island, New York 10304 and its
telephone number is (718) 447-7900.
STATEN ISLAND SAVINGS BANK
Staten Island Savings operated as a New York-chartered savings bank
since it was founded in 1864 until its conversion to a federally-chartered
mutual savings bank in August 1997. The Bank maintains a network of 16 full
service branch offices and three limited service branch offices in Staten
Island, New York, and one branch office in the Bay Ridge area of Brooklyn, New
York. As of April 30, 1997, Staten Island Savings had $1.8 billion of total
assets, $1.7 billion of total liabilities, including $1.6 billion of deposits,
and $177.3 million of net worth (representing 9.6% of total assets). Staten
Island Savings is primarily engaged in attracting deposits from the general
public and using those and other available sources of funds to originate loans
secured primarily
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by single-family (one-to four-units) residences located in Staten Island and,
to a lesser extent, Brooklyn, New York. The Bank also originates loans secured
by commercial real estate, construction and land loans (primarily to developers
operating in Staten Island), home equity loans, multi-family residential loans
and other loans. Commencing with its acquisition of Gateway in August 1995,
the Bank has diversified, to a certain extent, its business activities by
increasing its emphasis on attracting commercial customers. In addition to
continuing Gateway's traditional commercial bank business, which emphasized
commercial real estate and construction and land loans, the Bank has increased
its business development efforts, has hired additional personnel, including
experienced commercial loan originators, and has commenced a program designed
to cross-sell services to existing customers as well as attract new customers.
In addition to its loan and deposit products, the Bank also provides trust
services and savings bank life insurance.
The Bank has long-standing ties to Staten Island with over 133 years
of service to the communities and residents of Staten Island. As of June 30,
1996 (the latest available data), the Bank is the largest depository
institution in terms of deposit market share in Staten Island with 30% of the
total deposits and 23% of the total number of branch offices of depository
institutions in Staten Island. Historically, the Bank also has been among the
leaders in terms of the number and amount of new residential mortgage loan
originations in Staten Island. Staten Island Savings' operating strategy
emphasizes customer service and convenience and, in large part, the Bank
attributes its commitment to maintaining customer satisfaction for its market
share position. The Bank attempts to differentiate itself from its competitors
by providing the type of personalized customer service not generally available
from larger banks while offering a greater variety of products and services
than is typically available from smaller, local depository institutions. The
Bank has an experienced management team directing its operations. The Bank's
Chairman and Chief Executive Officer and President and Chief Operating Officer
have 31 years and 27 years, respectively, of service with the Bank while the
other executive officers of the Bank have an average of 14 years of service
with Staten Island Savings.
The Bank is subject to examination and comprehensive regulation by the
OTS, which is the Bank's chartering authority and primary federal regulator.
The Bank is also regulated by the FDIC, the administrator of the BIF. The Bank
is also subject to certain reserve requirements established by the FRB and is a
member of the FHLB of New York, which is one of the 12 regional banks
comprising the FHLB System.
USE OF PROCEEDS
Although the actual net proceeds from the sale of the Common Stock
cannot be determined until the Conversion is completed, it is presently
anticipated that the net proceeds from the sale of the Common Stock will be
between $257.4 million and $349.2 million ($402.1 million assuming an increase
in the Estimated Valuation Range by 15%). See "Pro Forma Data" and "The
Conversion - Stock Pricing and Number of Shares to be Issued" as to the
assumptions used to arrive at such amounts.
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The Company will purchase all of the capital stock of the Bank to be
issued in the Conversion in exchange for 50% of the net Conversion proceeds,
and the Company will retain the remaining 50% of the net proceeds. The Company
intends to use a portion of the net proceeds to make a loan directly to the
ESOP to enable the ESOP to purchase up to 8% of the Common Stock. Based upon
the issuance of 26,309,524 shares or 35,595,238 shares at the minimum and
maximum of the Estimated Valuation Range, respectively, the loan to the ESOP
would be $21.0 million and $28.5 million, respectively. See "Management of the
Company - Benefits - Employee Stock Ownership Plan." The remaining net
proceeds retained by the Company initially may be used to invest in investment
securities, mortgage-backed securities, U.S. Government and federal agency
securities of various maturities, deposits in either the Bank or other
financial institutions, or a combination thereof. The portion of the net
proceeds retained by the Company may ultimately be used to support the Bank's
lending activities, to support the future expansion of operations through
acquisitions of other financial institutions or branch offices (although no
such transactions are specifically being considered at this time), and for
other business and investment purposes, including the payment of regular or
special cash dividends, possible repurchases of the Common Stock or returns of
capital. Management of the Company may consider expanding or diversifying,
should such opportunities become available. Neither the Bank nor the Company
has any specific plans, arrangements, or understandings regarding any
acquisitions or diversification of activities at this time, nor have criteria
been established to identify potential candidates for acquisition.
Following the six-month anniversary of the completion of the
Conversion (to the extent permitted by the OTS), and based upon then existing
facts and circumstances, the Company's Board of Directors may determine to
repurchase some shares of Common Stock, subject to any applicable statutory and
regulatory requirements. Such facts and circumstances may include but not be
limited to (i) market and economic factors such as the price at which the stock
is trading in the market, the volume of trading, the attractiveness of other
investment alternatives in terms of the rate of return and risk involved in the
investment, the ability to increase the book value and/or earnings per share of
the remaining outstanding shares, and an improvement in the Company's return on
equity; (ii) the avoidance of dilution to stockholders by not having to issue
additional shares to cover the exercise of stock options or to fund employee
stock benefit plans; and (iii) any other circumstances in which repurchases
would be in the best interests of the Company and its stockholders. Any stock
repurchases will be subject to the determination of the Company's Board of
Directors that the Bank will be capitalized in excess of all applicable
regulatory requirements after any such repurchases. The payment of dividends
or repurchase of stock, however, would be prohibited if the Bank's net worth
would be reduced below the amount required for the liquidation account to be
established for the benefit of Eligible Account Holders and Supplemental
Eligible Account Holders. As of April 30, 1997, the initial balance of the
liquidation account would be approximately $177.3 million. See "Dividend
Policy," "The Conversion - Liquidation Rights" and "The Conversion - Certain
Restrictions on Purchase or Transfer of Shares After the Conversion."
The Company will be a unitary savings and loan holding company which,
under existing laws, would generally not be restricted as to the types of
business activities in which it may engage, provided that the Bank continues to
be a qualified thrift lender ("QTL"). See
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"Regulation - Regulation of Savings and Loan Holding Companies" for a
description of certain regulations applicable to the Company.
The portion of the net proceeds used by the Company to purchase the
capital stock of the Bank will be added to the Bank's general funds to be used
for general corporate purposes, including increased lending activities and
purchases of securities. While the amount of net proceeds received by the Bank
will further strengthen the Bank's capital position, which already
substantially exceeds all regulatory requirements, it should be noted that the
Bank is not converting primarily to raise capital. After the Conversion, the
Bank's tangible capital ratio will be 14.0% (based upon the midpoint of the
Estimated Valuation Range). As a result, the Bank will be a well-capitalized
institution. After the Conversion, the Bank intends to emphasize capital
strength and growth in assets and earnings.
THE NET PROCEEDS MAY VARY BECAUSE TOTAL EXPENSES OF THE CONVERSION MAY
BE MORE OR LESS THAN THOSE ESTIMATED. The net proceeds will also vary if the
number of shares to be issued in the Conversion is adjusted to reflect a change
in the estimated pro forma market value of the Bank. Payments for shares made
through withdrawals from existing deposit accounts at the Bank will not result
in the receipt of new funds for investment by the Bank but will result in a
reduction of the Bank's interest expense and liabilities as funds are
transferred from interest-bearing certificates or other deposit accounts.
DIVIDEND POLICY
Upon completion of the Conversion, the Board of Directors of the
Company intends to consider implementation of a policy of paying dividends on
the Common Stock, subject to statutory and regulatory requirements. However,
there has been no determination made at this point in time as to the initial
rate of dividend, if any, to be paid on the Common Stock. The initial or
continued payment of dividends thereof will depend upon a number of factors,
including the amount of net proceeds retained by the Company in the Conversion,
investment opportunities available to the Company or the Bank, capital
requirements, the Company's and the Bank's financial condition and results of
operations, tax considerations, statutory and regulatory limitations, and
general economic conditions. No assurances can be given that any dividends
will be paid or that, if paid, will not be reduced or eliminated in future
periods. Special cash dividends, stock dividends or returns of capital may be
paid in addition to, or in lieu of, regular cash dividends.
Dividends from the Company may eventually depend, in part, upon
receipt of dividends from the Bank, because the Company initially will have no
source of income other than dividends from the Bank, earnings from the
investment of proceeds from the sale of Common Stock retained by the Company,
and interest payments with respect to the Company's loan to the ESOP. A
regulation of the OTS imposes limitations on "capital distributions" by savings
institutions, including cash dividends, payments by a savings institution to
repurchase or otherwise acquire its stock, payments to stockholders of another
savings institution in a cash-out merger and other
29
<PAGE> 69
distributions charged against capital. See "Regulation - Regulation of Federal
Savings Banks - Capital Distribution - Regulation."
Any payment of dividends by the Bank to the Company which would be
deemed to be drawn out of the Bank's bad debt reserves would require a payment
of taxes at the then-current tax rate by the Bank on the amount of earnings
deemed to be removed from the reserves for such distribution. The Bank does not
intend to make any distribution to the Company that would create such a federal
tax liability. See "Taxation."
Unlike the Bank, the Company is not subject to the aforementioned
regulatory restrictions on the payment of dividends to its stockholders,
although the source of such dividends may eventually be dependent, in part,
upon dividends from the Bank in addition to the net proceeds retained by the
Company and earnings thereon. The Company is subject, however, to the
requirements of Delaware law, which generally limit dividends to an amount
equal to the excess of the net assets of the Company (the amount by which total
assets exceed total liabilities) over its statutory capital, or if there is no
such excess, to its net profits for the current and/or immediately preceding
fiscal year.
MARKET FOR COMMON STOCK
The Company and the Bank have never issued capital stock, and,
consequently, there is no established market for the Common Stock at this time.
The Company has applied to have its Common Stock listed on the NYSE under the
symbol "SIB." Making a market involves maintaining bid and ask quotations
and being able, as principal, to effect transactions in reasonable quantities
at these quoted prices, subject to various securities laws and other regulatory
requirements. Additionally, the development of a liquid public market depends
on the existence of willing buyers and sellers, the presence of which is not
within the control of the Company, the Bank or any market maker. Accordingly,
the number of active buyers and sellers of the Common Stock at any particular
time may be limited. Under such circumstances, investors in the Common Stock
could have difficulty disposing of their shares and should not view the Common
Stock as a short-term investment. Accordingly, there can be no assurance that
an active and liquid trading market for the Common Stock will develop or that,
if developed, it will continue, nor is there any assurance that persons
purchasing shares of Common Stock will be able to sell them at or above the
Purchase Price. Keefe, Bruyette has indicated its intention to act as a market
maker in the Common Stock following the consummation of the Conversion,
depending on trading volume and subject to compliance with applicable laws and
regulatory requirements. There can be no assurance there will be two or more
market makers for the Common Stock. There can be no assurance that purchasers
will be able to sell their shares at or above the Purchase Price.
30
<PAGE> 70
REGULATORY CAPITAL
At April 30, 1997, the Bank exceeded all of the regulatory capital
requirements applicable to it. The table on the following page sets forth the
Bank's historical regulatory capital at April 30, 1997 and the pro forma
regulatory capital of the Bank after giving effect to the Conversion, based
upon the sale of the number of shares shown in the table. The pro forma
regulatory capital amounts reflect the receipt by the Bank of 50% of the net
Conversion proceeds, minus the amounts to be loaned to the ESOP and contributed
to the RRP. The pro forma risk-based capital amounts assume the investment of
the net proceeds received by the Bank in assets which have a risk-weight of 50%
under applicable regulations, as if such net proceeds had been received and so
applied at April 30, 1997.
31
<PAGE> 71
<TABLE>
<CAPTION>
Pro Forma at April 30, 1997 Based on
-------------------------------------------------------
26,309,524 30,952,381
Shares Sold Shares Sold
Historical at at $10.00 at $10.00
April 30, 1997 Per Share Per Share
------------------------ -------------------------- --------------------------
Percent of Percent of Percent of
Amount Assets(1) Amount Assets(1) Amount Assets(1)
---------- ---------- -------- ----------- -------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible capital(2):
Actual . . . . . . . . $154,040 8.44% $257,336 13.20% $275,824 13.99%
Requirement . . . . . . 27,376 1.50 29,241 1.50 29,574 1.50
-------- ----- -------- ----- -------- -----
Excess . . . . . . . . $126,664 6.94% $228,095 11.70% $246,251 12.49%
======== ===== ======== ===== ======== =====
Core capital(2)(3):
Actual . . . . . . . . $173,838 9.53% $277,134 14.22% $295,622 14.99%
Requirement . . . . . . 54,751 3.00 58,482 3.00 59,148 3.00
-------- ----- -------- ----- -------- -----
Excess . . . . . . . . $119,087 6.53% $218,652 11.22% $236,475 11.99%
======== ===== ======== ===== ======== =====
Risk-based capital(2)(3):
Actual . . . . . . . . $164,539 19.59% $267,835 29.69% $286,323 31.35%
Requirement . . . . . . 67,195 8.00 72,168 8.00 73,056 8.00
-------- ----- -------- ----- -------- -----
Excess . . . . . . . . $ 97,344 11.59% $195,667 21.69% $213,267 23.35%
======== ===== ======== ===== ======== =====
</TABLE>
<TABLE>
<CAPTION>
Pro Forma at April 30, 1997 Based on
---------------------------------------------------
35,595,238 40,934,524
Shares Sold Shares Sold
at $10.00 at $10.00
Per Share Per Share
------------------------- -----------------------
Percent of Percent of
Amount Assets(1) Amount Assets(1)
---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Tangible capital(2):
Actual . . . . . . . . $294,313 14.76% $315,574 15.63%
Requirement . . . . . . 29,907 1.50 30,290 1.50
-------- ----- -------- -----
Excess . . . . . . . . $264,406 13.26% $285,284 14.13%
======== ===== ======== =====
Core capital(2)(3):
Actual . . . . . . . . $314,111 15.75% $335,372 16.61%
Requirement . . . . . . 59,814 3.00 60,580 3.00
-------- ----- -------- -----
Excess . . . . . . . . $254,297 12.75% $274,793 13.61%
======== ===== ======== =====
Risk-based capital(2)(3):
Actual . . . . . . . . $304,812 32.98% $326,073 34.80%
Requirement . . . . . . 73,945 8.00 74,966 8.00
-------- ----- -------- -----
Excess . . . . . . . . $230,867 24.98% $251,107 26.80%
======== ===== ======== =====
</TABLE>
- ---------------------------------
(1) Adjusted total or adjusted risk-weighted assets, as appropriate.
(2) Based on the OTS regulatory capital requirements which became
applicable to the Bank upon its conversion to a federal savings bank
in July 1997.
(3) Does not reflect the interest rate risk component to be added to the
risk-based capital requirements or, in the case of the core capital
requirement, the 4.0% requirement to be met in order for an
institution to be "adequately capitalized" under applicable laws and
regulations. See "Regulation - Regulation of Federal Savings Banks -
Regulatory Capital Requirements."
32
<PAGE> 72
CAPITALIZATION
The following table presents the historical consolidated
capitalization of the Savings Bank at April 30, 1997, and the pro forma
consolidated capitalization of the Company after giving effect to the
Conversion, based upon the sale of the number of shares shown below and the
other assumptions set forth under "Pro Forma Data."
<TABLE>
<CAPTION>
The Company - Pro Forma
Based Upon Sale at $10.00 Per Share
----------------------------------------
The 26,309,524 Shares 30,952,381 Shares
Bank-Historical (Minimum of (Midpoint of a
Capitalization Range) Range)
----------------- ------------------ -------------------
(In Thousands)
<S> <C> <C> <C>
Deposits(2) . . . . . . . . . . . . . . . . . $1,606,793 $1,606,793 $1,606,793
Borrowings . . . . . . . . . . . . . . . . . 30,043 30,043 30,043
---------- ---------- ----------
Total deposits and borrowings . . . . . . . . $1,636,836 $1,636,836 $1,636,836
========= ========= =========
Stockholders' equity:
Preferred Stock, $.01 par value, 25,000,000
shares authorized; none to be issued . . $ -- $ -- $ --
Common Stock, $.01 par value,
100,000,000 shares authorized; shares to
be issued as reflected(3) . . . . . . . -- 276 325
Additional paid-in capital . . . . . . . . -- 257,094 302,982
Shares issued to Foundation(4) . . . . . . -- 13,155 15,476
Retained earnings(5) . . . . . . . . . . . 173,838 173,838 173,838
Net unrealized gain on marketable
securities . . . . . . . . . . . . . . . 3,457 3,457 3,457
Less:
Expense of contribution to Foundation,
net(6) . . . . . . . . . . . . . . . . . -- (6,972) (8,202)
Common Stock to be acquired by the
ESOP(7) . . . . . . . . . . . . . . . . -- (21,048) (24,762)
Common Stock to be acquired by the
Recognition Plan(8) . . . . . . . . . . -- (10,524) (12,381)
--------- ---------- ---------
Total stockholders' equity . . . . . . . . . $ 177,295 $ 409,276 $ 450,733
========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
The Company - Pro Forma
Based Upon Sale at $10.00 Per Share
-------------------------------------------
35,595,238 Shares 40,934,524 Shares(1)
(Maximum of (15% above
Range) Maximum of Range)
------------------ ---------------------
(In Thousands)
<S> <C> <C>
Deposits(2) . . . . . . . . . . . . . . . . . $1,606,793 $1,606,793
Borrowings . . . . . . . . . . . . . . . . . 30,043 30,043
---------- ----------
Total deposits and borrowings . . . . . . . . $1,636,836 $1,636,836
========= =========
Stockholders' equity:
Preferred Stock, $.01 par value, 25,000,000
shares authorized; none to be issued . . $ -- $ --
Common Stock, $.01 par value,
100,000,000 shares authorized; shares to
be issued as reflected(3) . . . . . . . 374 430
Additional paid-in capital(3) . . . . . . 348,870 401,642
Shares issued to Foundation(4) . . . . . . 17,798 20,467
Retained earnings(5) . . . . . . . . . . . 173,838 173,838
Net unrealized gain on marketable
securities . . . . . . . . . . . . . . . 3,457 3,457
Less:
Expense of contribution to Foundation,
net(6) . . . . . . . . . . . . . . . . . (9,433) (10,847)
Common Stock to be acquired by the
ESOP(7) . . . . . . . . . . . . . . . . (28,476) (32,748)
Common Stock to be acquired by the
Recognition Plan(8) . . . . . . . . . . (14,238) (16,374)
---------- ----------
Total stockholders' equity . . . . . . . . . $ 492,190 $ 539,865
========= =========
</TABLE>
(Footnotes on following page)
33
<PAGE> 73
- --------------------------------
(1) As adjusted to give effect to an increase in the number of shares
which could occur due to an increase in the Valuation Price Range of
up to 15% to reflect changes in market and financial conditions
following the commencement of the Offerings.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
Common Stock in the Offerings. Such withdrawals would reduce pro
forma deposits by the amount of such withdrawals.
(3) Reflects the issuance of the shares of Common Stock to be sold in the
Offerings. No effect has been given to the issuance of additional
shares of Common Stock pursuant to the proposed Option Plan. See "Pro
Forma Data," "Management - Management of the Bank - Benefits - Stock
Option Plan." Reflects issuance of additional shares of Common Stock
to the Foundation.
(4) Reflects shares to be contributed to the Foundation at an assumed
value of $10.00 per share.
(5) For purposes of this presentation, includes the Bank's surplus account
and undivided profits. The retained earnings of the Bank will be
substantially restricted after the Conversion by virtue of the
liquidation account to be established in connection with the
Conversion. See "The Conversion -Liquidation Rights." In addition,
certain distributions from the Bank's retained earnings may be treated
as being from its accumulated bad debt reserve for tax purposes, which
would cause the Bank to have additional taxable income. See
"Taxation."
(6) Net of the tax effect of the contribution of Common Stock based upon a
47% marginal tax rate. The realization of the deferred tax benefit is
limited annually to 10% of the Company's annual taxable income,
subject to the ability of the Company to carry forward any unused
portion of the deduction for five years following the year in which
the contribution is made.
(7) Assumes that 8.0% of the Common Stock sold in the Offerings will be
purchased by the ESOP, which is reflected as a reduction of
stockholders' equity. The ESOP shares will be purchased with funds
loaned to the ESOP by the Company. See "Pro Forma Data" and
"Management - Management of the Bank - Benefits - Employee Stock
Ownership Plan."
(8) The Company intends to adopt the Recognition Plan and to submit such
plan to stockholders at an annual or special meeting of stockholders
held at least six months following the consummation of the Conversion.
If the plan is approved by stockholders, the Company intends to
contribute sufficient funds to the trust created under the Recognition
Plan to enable the trust to purchase a number of shares of Common
Stock equal to 4.0% of the Common Stock sold in the Offerings.
Assumes that stockholder approval has been obtained and that the
shares have been purchased in the open market at the Purchase Price.
However, in the event the Company issues authorized but unissued
shares of Common Stock to the Recognition Plan in the amount of 4.0%
of the Common Stock sold in the Offerings, the voting interests of
existing stockholders would be diluted -approximately 3.8%. The
shares are reflected as a reduction of stockholders' equity. See "Pro
Forma Data" and "Management - Management of the Bank - Benefits -
Recognition Plan."
34
<PAGE> 74
PRO FORMA DATA
The actual net proceeds from the sale of the Common Stock cannot be
determined until the Conversion is completed. However, net proceeds are
currently estimated to be between $257.4 million and $349.2 million (or $402.1
million in the event the Estimated Valuation Range is increased by 15%) based
upon the following assumptions: (i) all shares of Common Stock will be sold in
the Subscription Offering; (ii) no fees will be paid to the Keefe, Bruyette on
shares purchased by (x) the ESOP and any other employee benefit plan of the
Company or the Savings Bank, (y) officers, directors, employees and members of
their immediate families or (z) the Foundation; (iii) Keefe, Bruyette will
receive a fee equal to 1.15% of the aggregate Purchase Price for sales in the
Subscription Offering (excluding the sale of shares to the ESOP, employee
benefit plans, officers, directors and their immediate families and the
Foundation); (iv) the Company will contribute to the Foundation an amount of
Common Stock equal to 5% of the Common Stock sold in the Conversion from
authorized but unissued shares; and (v) total expenses, including the marketing
fees paid to Keefe, Bruyette, will be between $5.7 million and $6.7 million (or
$7.3 million in the event the Estimated Valuation Range is increased by 15%).
Actual expenses may vary from those estimated.
Pro forma consolidated net income and stockholders' equity of the
Company have been calculated for the four months ended April 30, 1997 and the
year ended December 31, 1996 as if the Common Stock to be issued in the
Offerings had been sold at the beginning of the period and the net proceeds had
been invested at 5.89% and 5.49%, respectively, which represents the yield on
one-year U.S. Government securities at April 30, 1997 and December 31, 1996
(which, in light of changes in interest rates in recent periods, are deemed by
the Company and the Bank to more accurately reflect pro forma reinvestment
rates than the arithmetic average method). The effect of withdrawals from
deposit accounts for the purchase of Conversion Stock has not been reflected.
A marginal tax rate of 47% has been assumed for the period, resulting in an
after-tax yield of 3.12% and 2.91%, respectively, for the four months ended
April 30, 1997 and the year ended December 31, 1996. Historical and pro forma
per share amounts have been calculated by dividing historical and pro forma
amounts by the indicated number of shares of Common Stock, as adjusted to give
effect to the shares purchased by the ESOP and the effect of the issuance of
shares to the Foundation. See Note 3 to the tables below. No effect has been
given in the pro forma stockholders' equity calculations for the assumed
earnings on the net proceeds. As discussed under "Use of Proceeds," the
Company intends to make a loan to fund the purchase of 8.0% of the Common Stock
by the ESOP and retain 50% of the net proceeds from the Offerings.
No effect has been given in the tables to the issuance of additional
shares of Common Stock pursuant to the proposed Option Plan. See "Management -
Management of the Bank - Benefits - Stock Option Plan" and "Management of the
Bank - Stock Benefit Plans." The table below gives effect to the Recognition
Plan, which is expected to be adopted by the Company following the Conversion
and presented (together with the Stock Option Plan) to stockholders for
approval at an annual or special meeting of stockholders to be held at least
six months following the consummation of the Conversion. If the Recognition
Plan is approved by stockholders, the Recognition Plan intends to acquire an
amount of Common Stock equal to 4.0% of the shares of
35
<PAGE> 75
Common Stock issued in the Offerings, either through open market purchases or
from authorized but unissued shares of Common Stock. The table below assumes
that stockholder approval has been obtained, as to which there can be no
assurance, and that the shares acquired by the Recognition Plan are purchased
in the open market at the Purchase Price. No effect has been given to (i) the
Company's results of operations after the Conversion, (ii) the market price of
the Common Stock after the Conversion, or (iii) a less than 4.0% purchase by
the Recognition Plan.
The following pro forma information may not be representative of the
financial effects of the foregoing transactions at the dates on which such
transactions actually occur and should not be taken as indicative of future
results of operations. Pro forma stockholders' equity represents the
difference between the stated amount of assets and liabilities of the Company
computed in accordance with GAAP.
THE FOLLOWING TABLE GIVES EFFECT TO THE ISSUANCE OF AUTHORIZED BUT
UNISSUED SHARES OF THE COMPANY'S COMMON STOCK TO THE FOUNDATION CONCURRENTLY
WITH THE COMPLETION OF THE CONVERSION. THE PRO FORMA STOCKHOLDERS' EQUITY IS
NOT INTENDED TO REPRESENT THE FAIR MARKET VALUE OF THE COMMON STOCK AND MAY BE
DIFFERENT THAN AMOUNTS THAT WOULD BE AVAILABLE FOR DISTRIBUTION TO STOCKHOLDERS
IN THE EVENT OF LIQUIDATION.
36
<PAGE> 76
<TABLE>
<CAPTION>
At or For the Four Months Ended April 30, 1997
------------------------------------------------------------
26,309,524 30,952,381 35,595,238 40,934,524
Shares Sold Shares Sold Shares Sold Shares Sold
at $10.00 at $10.00 at $10.00 at $10.00 Per
Per Share Per Share Per Share Share (15%
(Minimum of (Midpoint (Maximum of above Maximum
Range) of Range) Range) of Range)(8)
------------- ----------- ----------- -------------
(Dollars in Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Gross proceeds . . . . . . . . . . . . . . . $263,095 $309,524 $355,952 $409,345
Plus: Shares acquired by Foundation (equal to
5% of the shares issued in the Conversion) 13,155 15,476 17,798 20,467
-------- -------- -------- --------
Pro forma market capitalization . . . . . . $276,250 $325,000 $373,750 $429,813
======= ======= ======= =======
Gross proceeds . . . . . . . . . . . . . . . 263,095 309,524 355,952 409,345
Less offering expenses and commissions . . . 5,726 6,217 6,708 7,273
-------- -------- -------- --------
Estimated net proceeds . . . . . . . . . . $257,369 $303,307 $349,244 $402,072
Less: Shares purchased by the ESOP . . . . . (21,048) (24,762) (28,476) (32,748)
Shares purchased by the
Recognition Plan . . . . . . . . . . (10,524) (12,381) (14,238) (16,374)
-------- -------- -------- --------
Total estimated net proceeds, as adjusted(1) $225,798 $266,164 $306,530 $352,951
======= ======= ======= =======
Net income (2):
Historical . . . . . . . . . . . . . . . . $ 6,888 $ 6,888 $ 6,888 $ 6,888
Pro forma income on net proceeds,
as adjusted . . . . . . . . . . . . . . . 2,350 2,770 3,190 3,673
Pro forma ESOP adjustment(3) . . . . . . . (248) (292) (335) (386)
Pro forma Recognition Plan
adjustment(4) . . . . . . . . . . . . . . (372) (437) (503) (579)
-------- ------- -------- --------
Pro forma net income . . . . . . . . . . . $ 8,618 $ 8,929 $ 9,240 $ 9,596
======= ======= ======= =======
Net income per share(2)(5):
Historical . . . . . . . . . . . . . . . . $0.27 $0.23 $0.20 $0.17
Pro forma income on net proceeds,
as adjusted . . . . . . . . . . . . . . . 0.09 0.09 0.09 0.09
Pro forma ESOP adjustment(3) . . . . . . . (0.01) (0.01) (0.01) (0.01)
Pro forma Recognition Plan
adjustment(4) . . . . . . . . . . . . . . (0.01) (0.01) (0.01) (0.01)
------ ------ ------ ------
Pro forma net income per share(4)(6) . . . $ 0.34 $ 0.30 $ 0.27 $ 0.24
===== ===== ===== =====
Offering price to pro forma net
income per share (5) . . . . . . . . . . . 9.80x 11.11x 12.35x 13.89x
==== ===== ===== =====
Stockholders' equity:
Historical . . . . . . . . . . . . . . . . $177,295 $177,295 $177,295 $177,295
Estimated net proceeds . . . . . . . . . . 257,369 303,307 349,244 402,072
Plus: Shares issued to Foundation . . . . . 13,155 15,476 17,798 20,467
Less: Contribution to Foundation . . . . . (13,155) (15,476) (17,798) (20,467)
Plus: Tax benefit of the contribution
to Foundation . . . . . . . . . . . 6,183 7,274 8,365 9,620
Less: Common Stock acquired
by the ESOP(3) . . . . . . . . . . (21,048) (24,762) (28,476) (32,748)
Common Stock to be acquired by
the Recognition Plan(4) . . . . . . (10,524) (12,381) (14,238) (16,374)
-------- -------- -------- --------
Pro forma stockholders' equity(4)(6)(7) . . $409,276 $450,733 $492,190 $539,865
======= ======= ======= =======
Stockholders' equity per share(5):
Historical . . . . . . . . . . . . . . . . $6.42 $5.46 $4.74 $4.12
Estimated net proceeds . . . . . . . . . . 9.32 9.33 9.34 9.35
Plus: Shares issued to Foundation . . . . . 0.48 0.48 0.48 0.48
Less: Contribution to Foundation . . . . . (0.48) (0.48) (0.48) (0.48)
Plus: Tax benefit of contribution to
Foundation . . . . . . . . . . . . 0.22 0.22 0.22 0.22
Less: Common Stock acquired
by the ESOP(3) . . . . . . . . . . (0.76) (0.76) (0.76) (0.76)
Common Stock to be acquired by
the Recognition Plan(4) . . . . . . (0.38) (0.38) (0.38) (0.38)
------ ------ ------ ------
Pro forma stockholders' equity
per share(4)(6)(7) . . . . . . . . . . . $14.82 $13.87 $13.16 $12.55
===== ===== ===== =====
Offering price as a percentage of pro
forma stockholders' equity per share(5) . . 67.48% 72.10% 75.99% 79.68%
===== ===== ===== =====
Offering price as a percentage of pro forma
tangible stockholders' equity per share(5) 70.92% 75.41% 79.18% 82.71%
===== ===== ===== =====
</TABLE>
(Footnotes on following page)
37
<PAGE> 77
- -------------------
(1) Estimated net proceeds, as adjusted, consist of the estimated net
proceeds from the Offerings minus (i) the proceeds attributable to the
purchase by the ESOP and (ii) the value of the shares to be purchased
by the Recognition Plan, subject to stockholder approval, after the
Conversion at an assumed purchase price of $10.00 per share.
(2) Does not give effect to the non-recurring expense that will be
recognized in 1997 as a result of the establishment of the Foundation.
The Company will recognize an after-tax expense for the amount of the
contribution to the Foundation which is expected to be $6.97 million,
$8.20 million, $9.43 million and $10.85 million at the minimum,
midpoint, maximum and maximum, as adjusted, of the Estimated Valuation
Range, respectively. Assuming the contribution to the Foundation was
expensed during the four months ended April 30, 1997, pro forma net
earnings per share would be $0.07, $0.03, $0.00, and $(0.03), at the
minimum, midpoint, maximum and maximum as adjusted, respectively. Per
share net income data is based on 25,567,011, 30,078,836, 34,590,661
and 39,779,261 shares outstanding which represents shares sold in the
Offerings, shares contributed to the Foundation and shares to be
allocated or distributed under the ESOP and Recognition Plan for the
period presented.
(3) It is assumed that 8.0% of the shares of Common Stock sold in the
Offerings, will be purchased by the ESOP with funds loaned by the
Company. The Company and the Bank intend to make annual contributions
to the ESOP in an amount at least equal to the principal and interest
requirement of the debt. The pro forma net earnings assumes (i) that
the loan to the ESOP is payable over 15 years, with the ESOP shares
having an average fair value of $10.00 per share in accordance with
SOP 93-6, entitled "Employers' Accounting for Employee Stock Ownership
Plans," of the AICPA, and (ii) the effective tax rate was 47% for the
period. See "Management -Management of the Bank - Benefits - Employee
Stock Ownership Plan."
(4) It is assumed that the Recognition Plan will purchase, following
stockholder approval of such plan, a number of shares of Common Stock
equal to 4.0% of the shares of Common Stock for issuance to directors,
officers and employees. Funds used by the Recognition Plan to
purchase the shares initially will be contributed to the Recognition
Plan by the Company. It is further assumed that the shares were
acquired by the Recognition Plan at the beginning of the period
presented in open market purchases at the Purchase Price and that 6.7%
of the amount contributed, net of taxes, was an amortized expense
during the four months ended April 30, 1997. The issuance of
authorized but unissued shares of Common Stock pursuant to the
Recognition Plan in the amount of 4.0% of the Common Stock issued in
the Offerings would dilute the voting interests of existing
stockholders by approximately 3.8% and under such circumstances pro
forma net earnings per share for the four months ended April 30, 1997
would be $0.33, $0.29, $0.26 and $0.24, at the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Valuation Range,
respectively, and pro forma stockholders' equity per share at April
30, 1997 would be $14.64, $13.74, $13.06 and $12.47 at the minimum,
midpoint, maximum and 15% above the maximum of such range,
respectively. There can be no assurance that the actual purchase
price of shares purchased by or issued to the Recognition Plan will be
equal to the Purchase Price. See "Management - Management of the Bank
- Benefits - Recognition Plan."
(footnotes continued on following page)
38
<PAGE> 78
(5) The per share calculations are determined by adding the number of
shares assumed to be issued in the Conversion as well as contributed
to the Foundation and for purposes of calculating earnings per share,
in accordance with SOP 93-6, subtracting 2,057,989 shares, 2,421,164
shares, 2,784,339 shares, and 3,201,989 shares, respectively,
representing the ESOP shares which have not been committed for
release during the four months ended April 30, 1997. Thus, it is
assumed at April 30, 1997 that 25,567,011, 30,078,836, 34,590,661 and
39,779,261 shares of Common Stock are outstanding at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Valuation
Range, respectively. Assuming the uncommitted ESOP shares were not
subtracted from the number of shares of Common Stock outstanding at
April 30, 1997, the offering price as a multiple of pro forma net
earnings per share would be 10.42x, 11.90x, 13.33x and 14.49x at the
minimum, midpoint, maximum and 15% above the maximum of the Estimated
Valuation Range, respectively. For purposes of calculating pro forma
equity per share, it is assumed that shares outstanding total
27,625,000, 32,500,000, 37,375,000 and 42,981,250 shares at the
minimum, mid-point, maximum and 15% above the maximum of the Estimated
Valuation Range.
(6) No effect has been given to the issuance of additional shares of
Common Stock pursuant to the Option Plan, which will be adopted by the
Company following the Conversion and presented for approval by
stockholders at an annual or special meeting of stockholders of the
Company held at least six months following the consummation of the
Conversion. If the Option Plan is approved by stockholders, an amount
equal to 10% of the Common Stock issued in the Offerings, or
2,630,952, 3,095,238, 3,559,523 and 4,093,452 shares at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Valuation
Range, respectively, will be reserved for future issuance upon the
exercise of options to be granted under the Option Plan. The issuance
of Common Stock pursuant to the exercise of options under the Option
Plan will result in the dilution of existing stockholders' interests.
Assuming stockholder approval of the Option Plan, that all these
options were exercised at the beginning of the period at an exercise
price of $10.00 per share and that the shares to fund the Recognition
Plan are acquired through open market purchases at the Purchase Price,
pro forma net earnings per share for the four months ended April 30,
1997 would be $0.31, $0.28, $0.25 and $0.23 at the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Valuation Range,
respectively, and pro forma stockholders' equity per share at April
30, 1997 would be $14.39, $13.52, $12.88 and $12.33 at the minimum,
midpoint, maximum and 15% above the maximum of such range,
respectively. See "Management - Management of the Bank - Benefits -
Stock Option Plan."
(7) The retained earnings of the Bank will be substantially restricted
after the Conversion by virtue of the liquidation account to be
established in connection with the Conversion. See "Dividend Policy"
and "The Conversion - Liquidation Rights." In addition, certain
distributions from the Bank's retained earnings may be treated as
being from its accumulated bad debt reserve for tax purposes, which
would cause the Bank to have additional taxable income. See "Taxation
- Federal Taxation." Pro forma stockholders' equity and pro forma
stockholders' equity per share do not give effect to the liquidation
account or the bad debt reserves established by the Bank for federal
income tax purposes in the event of a liquidation of the Bank.
(8) As adjusted to give effect to an increase in the number of shares
which could occur due to an increase in the Estimated Valuation Range
of up to 15% to reflect changes in market and financial conditions
following the commencement of the Offerings.
39
<PAGE> 79
<TABLE>
<CAPTION>
At or For the Year Ended December 31, 1996
-------------------------------------------------------------
26,309,524 30,952,381 35,595,238 40,934,524
Shares Sold Shares Sold Shares Sold Shares Sold
at $10.00 at $10.00 at $10.00 at $10.00 Per
Per Share Per Share Per Share Share (15%
(Minimum of (Midpoint (Maximum of above Maximum
Range) of Range) Range) of Range)(8)
------------- ---------- ------------ ---------------
(Dollars in Thousands, Except Per Share Amounts)
<S> <C> <C> <C> <C>
Gross proceeds . . . . . . . . . . . . . . . $263,095 $309,524 $355,952 $409,345
Plus: Shares acquired by Foundation (equal to
5% of the shares issued in the Conversion) 13,155 15,476 17,798 20,467
-------- -------- -------- --------
Pro forma market capitalization . . . . . . $276,250 $325,000 $373,750 $429,813
======= ======= ======= =======
Gross proceeds . . . . . . . . . . . . . . . 263,095 309,524 355,952 409,345
Less offering expenses and commissions . . . 5,726 6,217 6,708 7,273
------- ------- ------- -------
Estimated net proceeds . . . . . . . . . . $257,369 $303,307 $349,244 $402,072
Less: Shares purchased by the ESOP . . . . . (21,048) (24,762) (28,476) (32,748)
Shares purchased by the
Recognition Plan . . . . . . . . . . (10,524) (12,381) (14,238) (16,374)
-------- ------- ------- -------
Total estimated net proceeds, as adjusted(1) $225,798 $266,164 $306,530 $352,951
======= ======= ======= =======
Net income (2):
Historical . . . . . . . . . . . . . . . . $ 21,775 $ 21,775 $ 21,775 $ 21,775
Pro forma income on net proceeds,
as adjusted . . . . . . . . . . . . . . . 6,570 7,745 8,919 10,270
Pro forma ESOP adjustment(3) . . . . . . . (744) (875) (1,006) (1,157)
Pro forma Recognition Plan
adjustment(4) . . . . . . . . . . . . . . (1,116) (1,312) (1,509) (1,736)
-------- ------- -------- --------
Pro forma net income . . . . . . . . . . . $ 26,485 $ 27,333 $ 28,179 $ 29,152
======= ======= ======= =======
Net income per share(2)(5):
Historical . . . . . . . . . . . . . . . . $0.85 $0.72 $0.63 $0.55
Pro forma income on net proceeds,
as adjusted . . . . . . . . . . . . . . . 0.26 0.26 0.26 0.26
Pro forma ESOP adjustment(3) . . . . . . . (0.03) (0.03) (0.03) (0.03)
Pro forma Recognition Plan
adjustment(4) . . . . . . . . . . . . . . (0.04) (0.04) (0.04) (0.04)
------ ------ ------ ------
Pro forma net income per share(4)(6) . . . $ 1.04 $ 0.91 $ 0.82 $ 0.74
===== ===== ===== =====
Offering price to pro forma net
income per share (5) . . . . . . . . . . . 9.62 10.99 12.20 13.51
===== ===== ===== =====
Stockholders' equity:
Historical . . . . . . . . . . . . . . . . $171,080 $171,080 $171,080 $171,080
Estimated net proceeds . . . . . . . . . . 257,369 303,307 349,244 402,072
Plus: Shares issued to Foundation . . . . . 13,155 15,476 17,798 20,467
Less: Contribution to Foundation . . . . . (13,155) (15,476) (17,798) (20,467)
Plus: Tax benefit of the contribution
to Foundation . . . . . . . . . . . 6,183 7,274 8,365 9,620
Less: Common Stock acquired
by the ESOP(3) . . . . . . . . . . (21,048) (24,762) (28,476) (32,748)
Common Stock to be acquired by
the Recognition Plan(4) . . . . . . (10,524) (12,381) (14,238) (16,374)
-------- -------- -------- --------
Pro forma stockholders' equity(4)(6)(7) . . $403,061 $444,518 $485,975 $533,650
======= ======= ======= =======
Stockholders' equity per share(5):
Historical . . . . . . . . . . . . . . . . $6.19 $5.26 $4.58 $3.98
Estimated net proceeds . . . . . . . . . . 9.32 9.33 9.34 9.35
Plus: Shares issued to Foundation . . . . . 0.48 0.48 0.48 0.48
Less: Contribution to Foundation . . . . . (0.48) (0.48) (0.48) (0.48)
Plus: Tax benefit of contribution to
Foundati on . . . . . . . . . . . . 0.22 0.22 0.22 0.22
Less: Common Stock acquired
by the ESOP(3) . . . . . . . . . . (0.76) (0.76) (0.76) (0.76)
Common Stock to be acquired by
the Recognition Plan(4) . . . . . . (0.38) (0.38) (0.38) (0.38)
------ ------ ------ ------
Pro forma stockholders' equity
per share(4)(6)(7) . . . . . . . . . . . $14.59 $13.67 $13.00 $12.41
===== ===== ===== =====
Offering price as a percentage of pro
forma stockholders' equity per share(5) . . 68.54% 73.15% 76.92% 80.58%
===== ===== ===== =====
Offering price as a percentage of pro forma
tangible stockholders' equity per share(5) 72.20% 76.69% 80.32% 83.82%
===== ===== ===== =====
</TABLE>
(Footnotes on following page)
40
<PAGE> 80
- -------------------
(1) Estimated net proceeds, as adjusted, consist of the estimated net
proceeds from the Offerings minus (i) the proceeds attributable to the
purchase by the ESOP and (ii) the value of the shares to be purchased
by the Recognition Plan, subject to stockholder approval, after the
Conversion at an assumed purchase price of $10.00 per share.
(2) Does not give effect to the non-recurring expense that will be
recognized in 1997 as a result of the establishment of the Foundation.
The Company will recognize an after-tax expense for the amount of the
contribution to the Foundation which is expected to be $6.97 million,
$8.20 million, $9.43 million and $10.85 million at the minimum,
midpoint, maximum and maximum, as adjusted, of the Estimated Valuation
Range, respectively. Assuming the contribution to the Foundation was
expensed during the year ended December 31, 1996, pro forma net
earnings per share would be $0.77, $0.64, $0.55, and $0.46, at the
minimum, midpoint, maximum and maximum as adjusted, respectively. Per
share net income data is based on 25,660,556, 30,188,889, 34,717,222
and 39,924,806 shares outstanding which represents shares sold in the
Offerings, shares contributed to the Foundation and shares to be
allocated or distributed under the ESOP and Recognition Plan for the
period presented.
(3) It is assumed that 8.0% of the shares of Common Stock sold in the
Offerings, will be purchased by the ESOP with funds loaned by the
Company. The Company and the Bank intend to make annual contributions
to the ESOP in an amount at least equal to the principal and interest
requirement of the debt. The pro forma net earnings assumes (i) that
the loan to the ESOP is payable over 15 years, with the ESOP shares
having an average fair value of $10.00 per share in accordance with
SOP 93-6, entitled "Employers' Accounting for Employee Stock Ownership
Plans," of the AICPA, and (ii) the effective tax rate was 47% for the
period. See "Management -Management of the Bank - Benefits - Employee
Stock Ownership Plan."
(4) It is assumed that the Recognition Plan will purchase, following
stockholder approval of such plan, a number of shares of Common Stock
equal to 4.0% of the shares of Common Stock for issuance to directors,
officers and employees. Funds used by the Recognition Plan to
purchase the shares initially will be contributed to the Recognition
Plan by the Company. It is further assumed that the shares were
acquired by the Recognition Plan at the beginning of the period
presented in open market purchases at the Purchase Price and that
20.0% of the amount contributed, net of taxes, was an amortized
expense during the year ended December 31, 1996. The issuance of
authorized but unissued shares of Common Stock pursuant to the
Recognition Plan in the amount of 4.0% of the Common Stock issued in
the Offerings would dilute the voting interests of existing
stockholders by approximately 3.8% and under such circumstances pro
forma net earnings per share for the year ended December 31, 1996
would be $1.01, $0.88, $0.79 and $0.71, at the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Valuation Range,
respectively, and stockholders' pro forma equity per share at
December 31, 1996 would be $14.43, $13.55, $12.90 and $12.33 at the
minimum, midpoint, maximum and 15% above the maximum of such range,
respectively. There can be no assurance that the actual purchase
price of shares purchased by or issued to the Recognition Plan will be
equal to the Purchase Price. See "Management - Management of the Bank
- Benefits - Recognition Plan."
(footnotes continued on following page)
41
<PAGE> 81
(5) The per share calculations are determined by adding the number of
shares assumed to be issued in the Conversion as well as contributed
to the Foundation and for purposes of calculating earnings per share,
in accordance with SOP 93-6, subtracting 1,964,444 shares, 2,311,111
shares, 2,657,778 shares and 3,056,444 shares, respectively,
representing the ESOP shares which have not been committed for release
during the year ended December 31, 1996. Thus, it is assumed at
December 31, 1996 that 25,660,556, 30,188,889, 34,717,222 and
39,924,806 shares of Common Stock are outstanding at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Valuation
Range, respectively. Assuming the uncommitted ESOP shares were not
subtracted from the number of shares of Common Stock outstanding at
December 31, 1996, the offering price as a multiple of pro forma net
earnings per share would be 10.42x, 11.90x, 13.33x and 14.71x at the
minimum, midpoint, maximum and 15% above the maximum of the Estimated
Valuation Range, respectively. For purposes of calculating pro forma
equity per share, it is assumed that shares outstanding total
27,625,000, 32,500,000, 37,375,000 and 42,981,250 shares at the
minimum, mid-point, maximum and 15% above the maximum of the Estimated
Valuation Range.
(6) No effect has been given to the issuance of additional shares of
Common Stock pursuant to the Option Plan, which will be adopted by the
Company following the Conversion and presented for approval by
stockholders at an annual or special meeting of stockholders of the
Company held at least six months following the consummation of the
Conversion. If the Option Plan is approved by stockholders, an amount
equal to 10% of the Common Stock issued in the Offerings, or
2,630,952, 3,095,238, 3,559,524 and 4,093,452 shares at the minimum,
midpoint, maximum and 15% above the maximum of the Estimated Valuation
Range, respectively, will be reserved for future issuance upon the
exercise of options to be granted under the Option Plan. The issuance
of Common Stock pursuant to the exercise of options under the Option
Plan will result in the dilution of existing stockholders' interests.
Assuming stockholder approval of the Option Plan, that all these
options were exercised at the beginning of the period at an exercise
price of $10.00 per share and that the shares to fund the Recognition
Plan are acquired through open market purchases at the Purchase Price,
pro forma net earnings per share for the year ended December 31, 1996
would be $0.96, $0.84, $0.76 and $0.68 at the minimum, midpoint,
maximum and 15% above the maximum of the Estimated Valuation Range,
respectively, and pro forma stockholders' equity per share at
December 31, 1996 would be $14.18, $13.35, $12.73 and $12.19 at the
minimum, midpoint, maximum and 15% above the maximum of such range,
respectively. See "Management - Management of the Bank - Benefits -
Stock Option Plan."
(7) The retained earnings of the Bank will be substantially restricted
after the Conversion by virtue of the liquidation account to be
established in connection with the Conversion. See "Dividend Policy"
and "The Conversion - Liquidation Rights." In addition, certain
distributions from the Bank's retained earnings may be treated as
being from its accumulated bad debt reserve for tax purposes, which
would cause the Bank to have additional taxable income. See "Taxation
- Federal Taxation." Pro forma stockholders' equity and pro forma
stockholders' equity per share do not give effect to the liquidation
account or the bad debt reserves established by the Bank for federal
income tax purposes in the event of a liquidation of the Bank.
(8) As adjusted to give effect to an increase in the number of shares
which could occur due to an increase in the Estimated Valuation Range
of up to 15% to reflect changes in market and financial conditions
following the commencement of the Offerings.
42
<PAGE> 82
COMPARISON OF VALUATION AND PRO FORMA INFORMATION WITH NO FOUNDATION
In the event that the Foundation was not being established as part of
the Conversion, RP Financial has estimated that the pro forma aggregate market
capitalization of the Company would be approximately $335.0 million at the
midpoint, which is approximately $10.0 million greater than the pro forma
aggregate market capitalization of the Company if the Foundation is included,
and would result in approximately $25.5 million increase in the amount of
Common Stock offered for sale in the Conversion. The pro forma price to book
ratio and pro forma price to earnings ratio would be approximately the same
under both the current appraisal and the estimate of the value of the Company
without the Foundation. Further, assuming the midpoint of the Estimated
Valuation Range, pro forma stockholders' equity per share and pro forma
earnings per share would be substantially the same at $13.87 and $13.90,
respectively, and $0.30 and $0.29, respectively, with the Foundation or without
the Foundation. The pro forma price to book ratio and the pro forma price to
earnings ratio are substantially the same with and without the Foundation at
the midpoint at 72.10% and 71.94%, respectively, and 11.11x and 11.49x,
respectively. There is no assurance that in the event the Foundation was not
formed that the appraisal prepared at the time would have concluded that the
pro forma market value of the Company would be the same as that estimated
herein. Any appraisals prepared at that time would be based on the facts and
circumstances existing at that time, including, among other things, market and
economic conditions.
For comparative purposes only, set forth below are certain pricing
ratios and financial data and ratios, at the minimum, midpoint, maximum and
maximum, as adjusted, of the Estimated Valuation Range, assuming the Conversion
was completed at April 30, 1997.
<TABLE>
<CAPTION>
At the Minimum At the Midpoint
------------------------------- -------------------------------
With No With No
Foundation Foundation Foundation Foundation
--------------- -------------- -------------- -------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Estimated offering amount . . . . . . . $ 263,095 $ 284,750 $ 309,524 $ 335,000
Pro forma market capitalization . . . . 276,250 284,750 325,000 335,000
Total assets . . . . . . . . . . . . . 2,080,276 2,092,920 2,121,733 2,136,608
Total liabilities . . . . . . . . . . . 1,636,836 1,636,836 1,636,836 1,636,836
Pro forma stockholders' equity . . . . 409,276 421,920 450,733 465,608
Pro forma consolidated net earnings . . 8,618 8,763 8,929 9,099
Pro forma stockholders' equity per
share . . . . . . . . . . . . . . . . 14.82 14.82 13.87 13.90
Pro forma consolidated net earnings per
share . . . . . . . . . . . . . . . 0.34 0.33 0.30 0.29
Pro forma pricing ratios:
Offering price as a percentage of pro
forma stockholders' equity per
share . . . . . . . . . . . . . . 67.48% 67.48% 72.10% 71.94%
Offering price to pro forma net
earnings per share . . . . . . . . 9.80x(1) 10.10x 11.11x(1) 11.49x
Pro forma market capitalization to
assets . . . . . . . . . . . . . . 13.28% 13.61% 15.32% 15.68%
Pro forma financial ratios:
Return on assets . . . . . . . . . . 1.24%(2) 1.26% 1.26%(2) 1.28%
Return on stockholders' equity . . . 6.32%(3) 6.23% 5.94%(3) 5.86%
Stockholders' equity to assets . . . 19.67% 20.16% 21.24% 21.79%
</TABLE>
<TABLE>
<CAPTION>
At the Maximum,
At the Maximum As Adjusted
------------------------------ -------------------------------
With No With No
Foundation Foundation Foundation Foundation
-------------- ------------ ------------- -------------
(Dollars in thousands, except per share amounts)
<S> <C> <C> <C> <C>
Estimated offering amount . . . . . . . $ 355,952 $ 385,250 $ 409,345 $ 443,038
Pro forma market capitalization . . . . 373,750 385,250 429,813 443,038
Total assets . . . . . . . . . . . . . 2,163,190 2,180,297 2,210,865 2,230,538
Total liabilities . . . . . . . . . . . 1,636,836 1,636,836 1,636,836 1,636,836
Pro forma stockholders' equity . . . . 492,190 509,297 539,865 559,538
Pro forma consolidated net earnings . . 9,240 9,436 9,596 9,822
Pro forma stockholders' equity per
share . . . . . . . . . . . . . . . . 13.16 13.22 12.55 12.63
Pro forma consolidated net earnings per
share . . . . . . . . . . . . . . . 0.27 0.26 0.24 0.24
Pro forma pricing ratios:
Offering price as a percentage of pro
forma stockholders' equity per
share . . . . . . . . . . . . . . 75.99% 75.64% 79.68% 79.18%
Offering price to pro forma net
earnings per share . . . . . . . . 12.35x(1) 12.82x 13.89x(1) 13.89x
Pro forma market capitalization to
assets . . . . . . . . . . . . . . 17.28% 17.67% 19.44% 19.86%
Pro forma financial ratios:
Return on assets . . . . . . . . . . 1.28%(2) 1.30% 1.30%(2) 1.32%
Return on stockholders' equity . . . 5.63%(3) 5.56% 5.33%(3) 5.27%
Stockholders' equity to assets . . . 22.75% 23.36% 24.42% 25.09%
</TABLE>
- ------------------
(1) If the contribution to the Foundation had been expensed during the four
months ended April 30, 1997, the offering price to pro forma net earnings
per share would have been 47.62x, 111.11x, not meaningful and not
meaningful at the minimum, midpoint, maximum and maximum, as adjusted,
respectively.
(2) If the contribution to the Foundation had been expensed during the four
months ended April 30, 1997, return on assets would have been 0.24%,
0.10%, (0.03)% and (0.17)% at the minimum, midpoint, maximum and maximum,
as adjusted, respectively.
(3) If the contribution to the Foundation had been expensed during the four
months ended April 30, 1997, return on stockholders' equity would have
been 1.21%, 0.48%, (0.12)% and (0.70)% at the minimum, midpoint, maximum
and maximum, as adjusted, respectively.
43
<PAGE> 83
STATEN ISLAND SAVINGS BANK AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
Set forth below are the consolidated statements of operations of the
Bank and its subsidiaries for the periods indicated. The consolidated
financial statements of the Bank as of December 31, 1996, 1995 and 1994 and for
the years then ended were audited by Arthur Andersen LLP, independent public
accountants. The consolidated statements of operations of the Bank for the
four months ended April 30, 1997 and 1996 were not audited by independent
public accountants but in the opinion of management reflect all adjustments,
consisting only of normal recurring accruals, necessary for a fair presentation
of the results of operations for those periods. Operating results for the four
months ended April 30, 1997 are not necessarily indicative of the results that
may be expected for any other interim period or the entire year ending December
31, 1997.
<TABLE>
<CAPTION>
(Unaudited)
For the Four Months For the Year Ended
Ended April 30, December 31,
-------------------- -------------------------------------
1997 1996 1996 1995 1994
------- -------- --------- --------- --------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Interest income:
Loans, including fees . . . . . . . . . . . $26,969 $22,621 $ 73,744 $ 58,136 $45,000
Securities available for sale and held to
maturity . . . . . . . . . . . . . . . . 15,277 16,051 49,083 43,593 44,496
Federal funds sold . . . . . . . . . . . . 679 534 1,603 2,627 788
------- -------- --------- --------- --------
Total interest income . . . . . . . . . . 42,925 39,206 124,430 104,356 90,284
------- -------- -------- -------- -------
Interest expense:
Savings accounts . . . . . . . . . . . . . 7,115 6,972 21,111 20,817 23,813
Time deposits . . . . . . . . . . . . . . . 8,588 8,572 25,760 20,741 10,595
Money market accounts . . . . . . . . . . . 805 817 2,441 1,868 1,541
NOW accounts . . . . . . . . . . . . . . . 107 355 1,038 705 496
Escrow accounts . . . . . . . . . . . . . . 27 25 81 98 87
Borrowed funds . . . . . . . . . . . . . . 261 2 6 5 5
------- --------- ---------- ---------- ---------
Total interest expense . . . . . . . . . 16,903 16,743 50,437 44,234 36,537
------- -------- -------- -------- --------
Net interest income . . . . . . . . . . . 26,022 22,463 73,993 60,122 53,747
Provision for loan losses . . . . . . . . . . 4,667 -- 1,000 -- 76
------- --------- --------- ---------- ---------
Net interest income after provision
for loan losses . . . . . . . . . . . . 21,355 22,463 72,993 60,122 53,671
Other income (loss):
Service and fee income . . . . . . . . . . 2,372 2,031 6,639 4,345 2,807
Securities transactions . . . . . . . . . . (508) 218 (2,710) (305) (759)
------- -------- --------- --------- --------
Total other income . . . . . . . . . . . 1,864 2,249 3,929 4,040 2,048
Other expenses:
Personnel . . . . . . . . . . . . . . . . . 6,617 6,401 19,684 15,635 11,356
Occupancy and equipment . . . . . . . . . . 1,748 1,842 5,397 4,365 3,664
Amortization of intangible assets . . . . . 692 759 2,143 1,155 536
FDIC insurance . . . . . . . . . . . . . . 122 1 2 1,414 2,807
Data processing . . . . . . . . . . . . . . 1,872 1,059 2,842 2,398 1,957
Marketing . . . . . . . . . . . . . . . . . 432 434 1,112 1,141 752
Professional fees . . . . . . . . . . . . . 311 197 1,542 1,051 634
Stationary and supplies . . . . . . . . . . 499 254 875 696 491
Other . . . . . . . . . . . . . . . . . . . 2,459 2,182 6,469 5,098 3,360
------ ------- -------- --------- --------
Total other expenses . . . . . . . . . . 14,752 13,129 40,066 32,953 25,557
------ ------- -------- -------- --------
Income before provision for income taxes 8,467 11,583 36,856 31,209 30,162
Provision for income taxes . . . . . . . . . 1,579 4,715 15,081 13,284 13,958
------- ------- -------- --------- --------
Income before cumulative effect
of accounting change . . . . . . . . . . . 6,888 6,868 21,775 17,925 16,204
Cumulative effect of change in accounting
for income taxes . . . . . . . . . . . . . -- -- -- 4,700 --
------- ------- -------- --------- --------
Net income . . . . . . . . . . . . . . . . . $ 6,888 $ 6,868 $ 21,775 $ 13,225 $ 16,204
======= ======= ======== ======== ========
</TABLE>
44
<PAGE> 84
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion is intended to assist in understanding the
financial condition and results of operations of the Bank. The discussion and
analysis does not include any comments relating to the Company since the
Company has had no significant operations. The information contained in this
section should be read in conjunction with the Consolidated Financial
Statements and the accompanying Notes to Consolidated Financial Statements and
the other sections contained in this Prospectus.
The Bank's results of operations depend primarily on its net interest
income, which is the difference between interest income on interest-earning
assets, which principally consist of loans and mortgage-backed and investment
securities, and interest expense on interest-bearing liabilities which
principally consist of deposits. The Bank's results of operations also are
affected by the provision for loan losses, the level of its noninterest income
and expenses, and income tax expense.
ASSET AND LIABILITY MANAGEMENT
The ability to maximize net interest income is largely dependent upon
the achievement of a positive interest rate spread that can be sustained during
fluctuations in prevailing interest rates. Interest rate sensitivity is a
measure of the difference between amounts of interest-earning assets and
interest-bearing liabilities which either reprice or mature within a given
period of time. The difference, or the interest rate repricing "gap," provides
an indication of the extent to which an institution's interest rate spread will
be affected by changes in interest rates. A gap is considered positive when
the amount of interest-rate sensitive assets exceeds the amount of
interest-rate sensitive liabilities, and is considered negative when the amount
of interest-rate sensitive liabilities exceeds the amount of interest-rate
sensitive assets. Generally, during a period of rising interest rates, a
negative gap within shorter maturities would adversely affect net interest
income, while a positive gap within shorter maturities would result in an
increase in net interest income, and during a period of falling interest rates,
a negative gap within shorter maturities would result in an increase in net
interest income while a positive gap within shorter maturities would have the
opposite effect. As of April 30, 1997, the ratio of the Bank's one-year gap to
total assets was a negative 6.89% and its ratio of interest-earning assets to
interest-bearing liabilities maturing or repricing within one year was 79.3%.
In order to minimize the potential for adverse effects of material and
prolonged increases in interest rates on the Bank's results of operations, the
Bank has adopted asset and liability management policies to better match the
maturities and repricing terms of the Bank's interest-earning assets and
interest-bearing liabilities. The Finance and Planning Committee, a Board
committee, sets and recommends the asset and liability policies of the Bank
which are implemented by the Asset and Liability Management Committee ("ALCO").
The ALCO is
45
<PAGE> 85
chaired by the Chief Financial Officer and comprised of members of the Bank's
management. The purpose of the ALCO is to communicate, coordinate and control
asset/liability management consistent with the Bank's business plan and Board
approved policies. The ALCO establishes and monitors the volume and mix of
assets and funding sources taking into account relative costs and spreads,
interest rate sensitivity and liquidity needs. The objectives are to manage
assets and funding sources to produce results that are consistent with
liquidity, capital adequacy, growth, risk and profitability goals. The ALCO
generally meets on a quarterly basis to review, among other things, economic
conditions and interest rate outlook, current and projected liquidity needs and
capital positions, anticipated changes in the volume and mix of assets and
liabilities and interest rate risk exposure limits versus current projections
pursuant to gap analysis and income simulations. At each meeting, the ALCO
recommends appropriate strategy changes based on such review. The Chief
Financial Officer or his designate is responsible for reviewing and reporting
on the effects of the policy implementations and strategies to the Finance and
Planning Committee, at least quarterly.
In order to manage its assets and liabilities and achieve the desired
liquidity, credit quality, interest risk, profitability and capital targets,
the Bank has focused its strategies on (i) originating adjustable rate loans,
(ii) originating relatively short-term commercial business and consumer loans
(iii) maintaining a significant level of investment securities and
mortgage-backed and investment securities with maturities or estimated average
lives of less than five years and (iv) managing its deposits to establish
stable deposit relationships.
The ALCO regularly reviews interest rate risk by forecasting the
impact of alternative interest rate environments on net interest income and
market value of portfolio equity ("MVPE"), which is defined as the net present
value of an institution's existing assets, liabilities and off-balance sheet
instruments, and evaluating such impacts against the maximum potential changes
in net interest income and MVPE that is authorized by the Board of Trustees of
the Bank.
46
<PAGE> 86
The following table sets forth as of April 30, 1997 the estimated
percentage change in the Bank's net interest income over a four-quarter period
and MVPE based on the indicated changes in interest rates.
<TABLE>
<CAPTION>
Estimated Change in
-----------------------------------------------------------------
Change (in Basis Points) in Interest Net Interest Income
Rates(1) (next four quarters) MVPE
- -------------------------------------- ---------------------------- ---------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
+400 (38.4)% $(30,070) (32.5)% $(78,512)
+300 (28.5) (22,291) (25.6) (61,870)
+200 (18.6) (14,545) (18.5) (44,592)
+100 ( 9.2) ( 7,205) ( 9.4) (22,698)
0 -- -- -- --
-100 8.1 6,304 4.6 11,059
-200 14.8 11,610 6.6 16,042
-300 16.4 12,841 10.6 25,697
-400 12.3 9,635 20.1 48,461
</TABLE>
- -------------
(1) Assumes an instantaneous uniform change in interest rates at all
maturities.
The assumptions used by management to evaluate the vulnerability of
the Bank's operations to changes in interest rates in the table above are based
on assumptions provided by the OTS and utilized in the gap table below.
Although management finds these assumptions reasonable, the interest rate
sensitivity of the Bank's assets and liabilities and the estimated effects of
changes in interest rates on the Bank's net interest income and MVPE indicated
in the above table could vary substantially if different assumptions were used
or actual experience differs from such assumptions. Based upon the
above-described changes in the Bank's MVPE, the Bank could be required to
deduct $4.7 million from its total capital if certain OTS regulations were
applicable, although the Bank would continue to be deemed a "well-capitalized"
institution. See "Regulation - Regulation of Federal Savings Banks -
Regulatory Capital Requirements."
47
<PAGE> 87
The following table summarizes the anticipated maturities or repricing
of the Bank's interest-earning assets and interest-bearing liabilities as of
April 30, 1997, based on the information and assumptions set forth in the notes
below.
<TABLE>
<CAPTION>
More Than
Three to More Than Three Years
Within Three Twelve One Year to to Five Over Five
Months Months Three Years Years Years Total
--------------- ----------- ------------- ------------- ----------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets (1):
Loans receivable (2):
Mortgage loans:
Fixed . . . . . . . . . . . . . . . . $ 9,458 $ 29,741 $ 75,853 $ 80,319 $313,852 $ 509,223
Adjustable . . . . . . . . . . . . . 51,472 93,684 110,015 118,521 51,748 425,440
Other loans . . . . . . . . . . . . . . 18,437 5,553 7,601 4,389 353 36,333
Securities:
Non-mortgage (3) . . . . . . . . . . . 7,982 27,405 42,359 22,664 40,870 141,280
Mortgaged-backed fixed (4) . . . . . . 14,883 29,780 68,653 65,866 81,672 260,854
Mortgage-backed adjustable (4) . . . . 22,830 100,685 55,163 51,649 230,327
Other interest-earning assets . . . . . . 74,150 -- -- -- -- 74,150
-------- -------- -------- -------- -------- ----------
Total interest-earning assets . . . . $199,212 $286,848 $359,644 $343,408 $488,495 $1,677,607
======= ======= ======= ======= ======= =========
Interest-bearing liabilities:
Deposits:
NOW accounts (5) . . . . . . . . . . . $ 1,545 $ 4,636 $ 5,681 $ 1,504 $ 3,342 $ 16,708
Savings accounts (5) . . . . . . . . . 34,953 104,860 213,832 139,813 328,973 822,431
Money market deposit accounts (5) . . . 16,180 48,540 9,012 4,301 3,891 81,924
Certificates of deposit . . . . . . . . 137,565 250,049 120,480 19,494 -- 527,588
Other borrowings . . . . . . . . . . . . -- 15,000 15,000 -- 43 30,043
--------- -------- --------- ----------- ---------- ----------
Total interest-bearing liabilities . $190,243 $423,085 $ 364,005 $165,112 $336,249 $1,478,694
======= ======= ======== ======= ======= =========
Excess (deficiency) of interest-earning
assets over interest-bearing liabilities $ 8,969 $(136,237) $ (4,361) $178,296 $152,246 $ 198,913
======= ======== ======== ======= ======= =========
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities . . . . . . . . . . . $ 8,969 $(127,268) $(131,629) $ 46,636 $198,913
======= ======== ======== ======= =======
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities as a percent of
total assets . . . . . . . . . . . . . . 0.49% (6.89)% (7.12)% 2.52% 10.76%
==== ===== ===== ==== =====
</TABLE>
- ---------------
(1) Adjustable-rate loans are included in the period in which interest
rates are next scheduled to adjust rather than in the period in which
they are due, and fixed-rate loans are included in the periods in
which they are scheduled to be repaid, based on scheduled
amortization, as adjusted to take into account estimated prepayments
based on assumptions used by the OTS in assessing the interest rate
sensitivity of savings associations in the Bank's region.
(2) Balances have been reduced for non-performing loans, which amounted to
$24.4 million at April 30, 1997.
(3) Based on contractual maturities.
(footnotes continued on next page)
48
<PAGE> 88
(4) Reflects estimated prepayments in the current interest rate
environment.
(5) Although the Bank's NOW accounts, passbook savings accounts and money
market deposit accounts are subject to immediate withdrawal,
management considers a substantial amount of such accounts to be core
deposits having significantly longer effective maturities. The decay
rates used on these accounts are based on the latest available OTS
assumptions and should not be regarded as indicative of the actual
withdrawals that may be experienced by the Bank. If all of the Bank's
NOW accounts, passbook savings accounts and money market deposit
accounts had been assumed to be subject to repricing within one year,
interest-bearing liabilities which were estimated to mature or reprice
within one year would have exceeded interest-earning assets with
comparable characteristics by $837.6 million or 45.3% of total assets.
Certain assumptions are contained in the above table which affect the
presentation therein. Although certain assets and liabilities may have similar
maturities or periods of repricing, they may react in different degrees to
changes in market interest rates. The interest rates on certain types of
assets and liabilities may fluctuate in advance of changes in market interest
rates, while interest rates of other types of assets and liabilities lag behind
changes in market interest rates. Certain assets, such as adjustable-rate
mortgage loans, have features which restrict changes in interest rates on a
short-term basis and over the life of the asset. In the event of a change in
interest rates, prepayment and early withdrawal levels would likely deviate
significantly from those assumed in calculating the table.
CHANGES IN FINANCIAL CONDITION
GENERAL. The Bank's total assets increased by $66.0 million or 3.7%
to $1.85 billion at April 30, 1997 compared to $1.78 billion at December 31,
1996. Such increase was primarily due to increased investments as the result
of the utilization proceeds from additional borrowings. Total assets increased
to $1.78 billion at December 31, 1996 compared to $1.73 billion at December 31,
1995. The $54.2 million or 3.1% increase was primarily due to a $166.9 million
or 20.8% increase in loans, net to $968.0 million at December 31, 1996 compared
to $801.1 million at December 31, 1995. Such increase was partially offset by
a decrease of $85.5 million or 10.8% in securities available for sale and $24.6
million or 31.9% in cash and cash equivalents.
CASH AND CASH EQUIVALENTS. Cash and cash equivalents, which consist
of cash and due from banks and federal fund sold, amounted to $113.7 million,
$52.6 million and $77.3 million at April 30, 1997, December 31, 1996 and
December 31, 1995, respectively. The decrease of $24.7 million or 32.0% between
December 31, 1995 and December 31, 1996 was primarily due to the use of such
cash to fund loan originations. Conversely, the increase of $61.1 million or
116.2% between December 31, 1996 and April 30, 1997 was primarily due to the
sale of the Bank's $28.2 million automobile lease portfolio during such period
as well as positive deposit inflows.
49
<PAGE> 89
LOANS. The Bank's net loan portfolio increased from $801.1 million at
December 31, 1995 to $968.0 million at December 31, 1996 and to $976.5 million
at April 30, 1997. The increase in the loan portfolio over this time period
was due to increased loan demand, the Bank's efforts to expand its lending
activities, particularly with respect to commercial real estate, construction
and land loans and commercial business lending. The increase in the Bank's
loan portfolio was partially offset by the repayment of $29.8 million of loans
secured by a pledge and assignment of an interest in automobile leases during
the four months ended April 30, 1997. Such efforts have included the expansion
of the Bank's loan products, particularly with respect to loans acquired in the
Gateway acquisition, the hiring of business development officers and commercial
loan officers and further accessing builders and mortgage brokers in its market
area. In addition, the August 1995 acquisition of Gateway added $124.2 million
of loans to the Bank's loan portfolio.
SECURITIES. Securities, including securities available for sale and
securities available for trading, amounted to $788.6 million at December 31,
1995 and $703.1 million and $691.9 million at December 31, 1996 and April 30,
1997, respectively. The decrease of $85.5 million or 10.8% between December
31, 1995 and 1996 was primarily due to the use of funds from maturities,
prepayments and sales to fund the Bank's loan growth. The Bank's securities
portfolio decreased only slightly between December 31, 1996 and April 30, 1997
as the Bank sought to maintain the size of the investment portfolio and instead
use borrowings as a funding source. In 1995 and 1996 and, to a lesser extent,
the four months ended April 30, 1997, the Bank restructured its investment
portfolio to increase the yield and, during 1995, the quality of the Bank's
investment portfolio. See "- Comparison of Results of Operations for the Four
Months Ended April 30, 1997 and 1996 - Other Income," "- Comparison of Results
of Operations for the Years Ended December 31, 1996 and 1995 - Other Income"
and "Comparison of Results of Operations for the Years Ended December 31, 1995
and 1994 - Other Income." The Bank presently intends to maintain its
securities portfolio and use borrowings to supplement deposits as the Bank's
main funding sources.
LIABILITIES. The Bank's total liabilities increased $59.8 million or
3.7% to $1.67 billion at April 30, 1997 compared to December 31, 1996. Such
increase was due primarily to an increase in borrowed funds and, to a lesser
extent, an increase in deposits. During the four months ended April 30, 1997,
the Bank began to use repurchase agreements as an alternative funding source to
deposits. Total liabilities increased $33.2 million or 2.1% to $1.61 billion
at December 31, 1996 compared to $1.58 billion at December 31, 1995.
NET WORTH. Total net worth amounted to $177.3 million at April 30,
1997 and $171.1 million and $150.1 million at December 31, 1996 and 1995,
respectively, or 9.6%, 9.6% and 8.7% of total assets at such dates. The
increase in net worth over the periods was due to continued profitable
operations. The increases in net worth were partially offset by decreases in
the unrealized appreciation on securities available for sale, net from $4.9
million at December 31, 1995 to $4.1 million and $3.5 million at December 31,
1996 and April 30, 1997, respectively.
50
<PAGE> 90
AVERAGE BALANCES, NET INTEREST INCOME, YIELDS EARNED AND RATES PAID
The following table sets forth, for the periods indicated, information
regarding (i) the total dollar amount of interest income of the Bank from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average rate; (iii) net interest income; (iv) interest rate spread; and (v) net
interest margin. Information is based on average daily balances during the
indicated periods. The table also reflects the yields on the Bank's
interest-earning assets and costs of the Bank's interest-bearing liabilities at
April 30, 1997.
<TABLE>
<CAPTION>
Four Months Ended
April 30,
--------------------------------------------------------------------
1997 1996
---------------------------------------- -----------------------
Average
Yield/Cost Average Yield/ Average
at April 30, 1997 Balance Interest Cost Balance Interest
----------------- ----------- ------------ --------- ------------ ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1):
Real estate loans . . . . . . . . . . . 8.40% $ 936,397 $25,259 8.20% $ 774,295 $20,966
Other loans . . . . . . . . . . . . . . 11.74 63,906 1,710 8.14 57,136 1,655
----------- ------- ---------- -------
Total loans . . . . . . . . . . . . 8.52 1,000,303 26,969 8.20 831,431 22,621
Securities . . . . . . . . . . . . . . . 6.70 689,125 15,277 6.74 760,429 16,051
Other earning assets(2) . . . . . . . . . 5.47 38,264 679 5.40 29,768 534
----------- ------- ---------- -------
Total interest-earning assets . . . . . 7.69 1,727,692 42,925 7.56 1,621,628 39,206
------- -------
Noninterest-earning assets . . . . . . . . 90,029 94,104
----------- ----------
Total assets . . . . . . . . . . . . . $1,817,721 $1,715,732
========= =========
Interest-bearing liabilities:
Deposits:
NOW and money market deposits . . . . . 2.84 $ 99,502 912 2.79 $ 136,660 1,172
Savings deposits . . . . . . . . . . . 2.64 825,097 7,142 2.63 745,170 6,997
Certificates of deposit . . . . . . . . 5.11 515,547 8,588 5.07 481,176 8,572
---------- ------- ---------- -------
Total deposits . . . . . . . . . . . 3.54 1,440,146 16,642 3.51 1,363,006 16,741
Total other borrowings . . . . . . . . . 6.10 13,044 261 6.09 45 2
---------- ------- --------- -------
Total interest-bearing liabilities . . . 3.59 1,453,190 16,903 3.54 1,363,051 16,743
------- -------
Noninterest bearing liabilities (3) . . . . 191,486 201,995
---------- ---------
Total liabilities . . . . . . . . . . 1,644,676 1,565,046
Stockholders' equity . . . . . . . . . . . 173,045 150,686
---------- ---------
Total liabilities and equity . . . . $1,817,721 $1,715,732
========= =========
Net interest-earning assets . . . . . . . . $ 274,502 $ 258,577
========= =========
Net interest income/interest rate spread . $26,022 4.02% $22,463
====== ===== ======
Net interest margin . . . . . . . . . . . . 4.58%
=====
Ratio of average interest-earning assets
to average interest-bearing liabilities . 118.89%
======
<CAPTION>
Four Months Ended
April 30, Year Ended December 31,
------------------ -------------------------------------------------------------
1996 1996 1995
----------------- ------------------------------------------------- ---------
Average Average
Yield/ Average Yield/ Average
Cost Balance Interest Cost Balance
-------- --------------- ------------ --------------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1):
Real estate loans . . . . . . . . . . . 8.24% $ 833,770 $ 68,600 8.23% $ 645,250
Other loans . . . . . . . . . . . . . . 8.81 57,913 5,144 8.88 54,719
---------- ------- ---------
Total loans . . . . . . . . . . . . 8.28 891,683 73,744 8.27 699,969
Securities . . . . . . . . . . . . . . . 6.42 737,796 49,083 6.65 700,048
Other earning assets(2) . . . . . . . . . 5.46 29,853 1,603 5.37 45,646
---------- ------- ---------
Total interest-earning assets . . . . . 7.36 1,659,332 124,430 7.49 1,445,663
-------
Noninterest-earning assets . . . . . . . . 93,611 60,104
---------- ---------
Total assets . . . . . . . . . . . . . $1,752,943 $1,505,767
========= =========
Interest-bearing liabilities:
Deposits:
NOW and money market deposits . . . . . 2.61 $ 134,600 3,479 2.58 $ 100,824
Savings deposits . . . . . . . . . . . 2.86 752,190 21,192 2.82 741,147
Certificates of deposit . . . . . . . . 5.42 493,180 25,760 5.22 391,786
---------- ------- ---------
Total deposits . . . . . . . . . . . 3.74 1,379,970 50,431 3.65 1,233,757
Total other borrowings . . . . . . . . . 13.52 47 6 12.77 46
---------- ------- ---------
Total interest-bearing liabilities . . . 3.74 1,380,017 50,437 3.65 1,233,803
-------
Noninterest bearing liabilities (3) . . . . 217,740 133,275
--------- ---------
Total liabilities . . . . . . . . . . 1,597,757 1,367,078
Stockholders' equity . . . . . . . . . . . 155,186 138,689
---------- ---------
Total liabilities and equity . . . . $1,752,943 $1,505,767
========= =========
Net interest-earning assets . . . . . . . . $ 279,315 $ 211,860
========= =========
Net interest income/interest rate spread . 3.62% $ 73,993 3.84%
===== ======= =====
Net interest margin . . . . . . . . . . . . 4.21% 4.46%
===== =====
Ratio of average interest-earning assets
to average interest-bearing liabilities . 118.97% 120.24%
====== ======
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------
1995 1994
------------------------ ------------------------------------
Average Average
Yield/ Average Yield/
Interest Cost Balance Interest Cost
------------ --------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1):
Real estate loans . . . . . . . . . . . $ 53,265 8.25% $ 528,331 $41,727 7.90%
Other loans . . . . . . . . . . . . . . 4,871 8.90 38,213 3,273 8.57
-------- ---------- -------
Total loans . . . . . . . . . . . . 58,136 8.31 566,544 45,000 7.94
Securities . . . . . . . . . . . . . . . 43,593 6.23 758,320 44,496 5.87
Other earning assets(2) . . . . . . . . . 2,627 5.76 19,230 788 4.10
-------- --------- -------
Total interest-earning assets . . . . . 104,356 7.22 1,344,094 90,284 6.72
-------- -------
Noninterest-earning assets . . . . . . . . 37,620
---------
Total assets . . . . . . . . . . . . . $1,381,714
=========
Interest-bearing liabilities:
Deposits:
NOW and money market deposits . . . . . 2,573 2.55 $ 86,183 2,037 2.36
Savings deposits . . . . . . . . . . . 20,915 2.82 844,334 23,900 2.83
Certificates of deposit . . . . . . . . 20,741 5.29 258,337 10,595 4.10
------- --------- -------
Total deposits . . . . . . . . . . . 44,229 3.58 1,188,854 36,532 3.07
-------
Total other borrowings . . . . . . . . . 5 10.87 54 5 9.26
-------- --------- -------
Total interest-bearing liabilities . . . 44,234 3.59 1,188,908 36,537 3.07
------- -------
Noninterest bearing liabilities (3) . . . . 70,718
---------
Total liabilities . . . . . . . . . . 1,259,626
Stockholders' equity . . . . . . . . . . . 122,088
----------
Total liabilities and equity . . . . $1,381,714
=========
Net interest-earning assets . . . . . . . . $ 155,186
==========
Net interest income/interest rate spread . $ 60,122 3.63% $53,747 3.64%
======= ===== ====== =====
Net interest margin . . . . . . . . . . . . 4.16% 4.00%
===== =====
Ratio of average interest-earning assets
to average interest-bearing liabilities . 117.17% 113.05%
====== ======
</TABLE>
- ------------------
(1) The average balance of loans receivable includes nonperforming loans,
interest on which is recognized on a cash basis.
(2) Includes money market accounts, Federal Funds sold and
interest-earning bank deposits.
(3) Consists primarily of demand deposit accounts.
51
<PAGE> 91
RATE/VOLUME ANALYSIS
The following table sets forth the effects of changing rates and
volumes on net interest income of the Bank. Information is provided with
respect to (i) effects on interest income attributable to changes in volume
(changes in volume multiplied by prior rate); (ii) effects on interest income
attributable to changes in rate (changes in rate multiplied by prior volume);
and (iii) changes in rate/volume (change in rate multiplied by change in
volume).
<TABLE>
<CAPTION>
Four Months Ended April 30, 1997
compared to 1996
------------------------------------------------------------------------
Increase (decrease) due to
-------------------------------------------------
Rate/ Total Net Increase
Rate Volume Volume (Decrease)
---------- --------- ---------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Real estate loans . . . . . . . . . . . . . . . . $ (80) $4,389 $ (16) $4,293
Other loans . . . . . . . . . . . . . . . . . . . (126) 196 (15) 55
------ ------- ------ ------
Total loans receivable . . . . . . . . . . . . (206) 4,585 (31) 4,348
Securities . . . . . . . . . . . . . . . . . . . . 807 (1,505) (76) (774)
Federal funds sold . . . . . . . . . . . . . . . . (6) 153 (2) 145
-------- ------- -- ------
Total net change in income on interest-
earning assets . . . . . . . . . . . . . . . . . 595 3,233 (109) 3,719
------
Interest-bearing liabilities:
Deposits:
NOW and money market deposits . . . . . . . . . . . 81 (319) (22) (260)
Savings accounts . . . . . . . . . . . . . . . . . (547) 751 (59) 145
Certificates of deposit . . . . . . . . . . . . . . (555) 612 (40) 17
------ ------ ----- ------
Total deposits . . . . . . . . . . . . . . . . . (1,021) 1,044 (121) (98)
Other borrowings . . . . . . . . . . . . . . . . . . (2) 867 (607) 258
------ ------ ----- ------
Total net change in expense on
interest-bearing liabilities . . . . . . . . . . . (1,023) 1,911 (728) 160
------ ------ ----- ------
Net change in net interest income . . . . . . . . . . $1,618 $1,322 $ 619 $3,559
===== ===== ===== =====
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------------------
1996 compared to 1995
-------------------------------------------------------------------------
Increase (decrease) due to
----------------------------------------------------
Rate/ Total Net Increase
Rate Volume Volume (Decrease)
---------- --------- ---------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Real estate loans . . . . . . . . . . . . . . . . . $ (176) $15,562 $ (51) $15,535
Other loans . . . . . . . . . . . . . . . . . . . . (11) 284 -- 273
------ ------- -------- -------
Total loans receivable . . . . . . . . . . . . . (187) 15,846 (51) 15,608
Securities . . . . . . . . . . . . . . . . . . . . . 2,979 2,351 160 5,490
Federal funds sold . . . . . . . . . . . . . . . . . (176) (909) 61 (1,024)
------ ------ ------ ------
Total net change in income on interest-
earning assets . . . . . . . . . . . . . . . . . . 2,616 17,288 170 20,074
------ ------- ------ -------
Interest-bearing liabilities:
Deposits:
NOW and money market deposits . . . . . . . . . . . . 33 862 11 906
Savings accounts . . . . . . . . . . . . . . . . . . (34) 312 (1) 277
Certificates of deposit . . . . . . . . . . . . . . . (277) 5,367 (71) 5,019
------ ------ ------- ------
Total deposits . . . . . . . . . . . . . . . . . . (278) 6,541 (61) 6,202
Other borrowings . . . . . . . . . . . . . . . . . . . 1 -- -- 1
------- ------- --------- ---------
Total net change in expense on
interest-bearing liabilities . . . . . . . . . . . . (277) 6,541 (61) 6,203
------ ------ ------- ------
Net change in net interest income . . . . . . . . . . . $2,893 $10,747 $ 231 $13,871
===== ====== ===== ======
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------
1995 compared to 1994
--------------------------------------------------------------
Increase (decrease) due to
--------------------------------------
Rate/ Total Net Increase
Rate Volume Volume (Decrease)
---------- ---------- ------ ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Real estate loans . . . . . . . . . . . . . . . . . . . $1,886 $9,234 $418 $11,538
Other loans . . . . . . . . . . . . . . . . . . . . . . 129 1,414 55 1,598
------ ------ ------ -------
Total loans receivable . . . . . . . . . . . . . . . 2,015 10,648 473 13,136
Securities . . . . . . . . . . . . . . . . . . . . . . . 2,726 (3,419) (210) (903)
Federal funds sold . . . . . . . . . . . . . . . . . . . 319 1,082 438 1,839
------ ------ ------ -------
Total net change in income on interest-
earning assets . . . . . . . . . . . . . . . . . . . . 5,060 8,311 701 14,072
------ ------- ---- -------
Interest-bearing liabilities:
Deposits:
NOW and money market deposits . . . . . . . . . . . . . . 162 346 28 536
Savings accounts . . . . . . . . . . . . . . . . . . . . (73) (2,921) 9 (2,985)
Certificates of deposit . . . . . . . . . . . . . . . . . 3,081 5,473 1,592 10,146
------- ------- ------ -------
Total deposits . . . . . . . . . . . . . . . . . . . . 3,170 2,898 1,629 7,697
Other borrowings . . . . . . . . . . . . . . . . . . . . . 1 (1) -- --
-------- ------- -------- -------
Total net change in expense on
interest-bearing liabilities . . . . . . . . . . . . . . 3,171 2,897 1,629 7,697
------ ------ ------- -------
Net change in net interest income . . . . . . . . . . . . . $ 1,889 $5,414 $ 928 $ 6,375
====== ===== ====== ======
</TABLE>
52
<PAGE> 92
COMPARISON OF RESULTS OF OPERATIONS FOR THE FOUR MONTHS ENDED APRIL 30, 1997
AND 1996
GENERAL. The Bank's net income amounted to $6.9 million for both the
four month periods ended April 30, 1997 and the four months ended April 30,
1996. The increase of $3.6 million or 15.8% in net interest income and the
decrease of $3.1 million or 66.5% in the provision for income taxes for the
four months ended April 30, 1997 compared to the same period in 1996 was
substantially offset by an increase of $4.7 million in the provision for
possible loan losses and an increase of $1.6 million or 12.4% in total other
expenses. These and other significant fluctuations in the Bank's results of
operations are discussed below.
NET INTEREST INCOME. Net interest income is determined by the Bank's
interest rate spread (i.e., the difference between the yields earned on the
Bank's interest-earning assets and the rates paid on its interest-bearing
liabilities) and the relative amounts of interest-earning assets and
interest-bearing liabilities. Net interest income increased $3.6 million or
15.8% to $26.0 million for the four months ended April 30, 1997 compared to
$22.5 million for the same period in 1996. The increase was due to an increase
in the Bank's interest rate spread to 4.02% for the four months ended April 30,
1997 compared to 3.62% for the same period in 1996 and an increase in the ratio
of average interest-earning assets to average interest-bearing liabilities to
118.89% for the 1997 period compared to 118.97% for the 1996 period. For the
same time periods, the Bank's net interest margin increased to 4.58% from
4.21%.
INTEREST INCOME. Interest income increased $3.7 million or 9.5% to
$42.9 million for the four months ended April 30, 1997 compared to $39.2
million for the same period in 1996. Such increase was primarily due to an
increase of $4.3 million or 19.2% in interest income on loans receivable to
$27.0 million for the four months ended April 30, 1997 from $22.6 million for
the same period in 1996. The increase in interest income on loans receivable
was partially offset by a decrease in interest income on securities of $774,000
or 4.8% to $15.3 million for the four months ended April 30, 1997 compared to
$16.1 million for the same period in 1996. The increase in interest income on
loans receivable was due to an increase in average balance of such assets of
$168.9 million or 20.3% as a result of increased loan demand, new loan products
and an increased emphasis on commercial and other lending. The average yield
earned on the Bank's loan portfolio decreased to 8.20% for the four months
ended April 30, 1997 from 8.28% for the same period in 1996. The decrease in
the average yield on the Bank's loan portfolio was primarily due to the
increased loan repayment activity on higher yielding loans and the downward
repricing of certain of the Bank's adjustable-rate loans. The decrease in
interest income on securities was due to a decrease in the average balance of
such assets of $71.3 million or 9.4% as a result of maturities and sales of
available for sale securities. In part, the sales of available for sale
securities were conducted in connection with the Bank's restructuring of its
investment securities portfolio to increase the yield and quality of such
portfolio. The decrease in interest income as a result of the decrease in the
average balance of securities was partially offset by an increase in the yield
earned on such assets from 6.42% for the four months ended April 30, 1996 to
6.74% for the four months ended April 30, 1997. Such increase reflects a
general increase in market interest rates and the use of funds from the sale of
lower rate securities to purchase higher
53
<PAGE> 93
yielding securities in connection with the Bank's restructuring of its
investment securities portfolio.
INTEREST EXPENSE. Interest expense increased slightly to $16.9
million for the four months ended April 30, 1997 from $16.7 million for the
same period in 1996, an increase of $160,000 or 1.0%. Such increase was
primarily due to an increase in interest expense on other borrowings,
consisting principally of repurchase agreements. During the four months ended
April 30, 1997, the Bank began to use repurchase agreements as an alternative
funding source to deposits. The Bank intends to continue to use repurchase
agreements and, in the future, FHLB advances to leverage its capital base and
provide funds for its lending activities. Interest expense on deposits
decreased $98,000 due to a decrease in the average rate paid from 3.74% for the
1996 period to 3.51% for the 1997 period which was substantially offset by an
increase in the average balance of such liabilities over the same time periods.
PROVISION FOR LOAN LOSSES. The Bank establishes provisions for loan
losses, which are charged to operations, in order to maintain the allowance for
loan losses at a level which is deemed appropriate to absorb future charge-offs
of loans deemed uncollectible. In determining the appropriate level of the
allowance for loan losses, management considers past and anticipated loss
experience, evaluations of real estate collateral, current and anticipated
economic conditions, volume and type of lending and the levels of nonperforming
and other classified loans. The amount of the allowance is based on estimates
and the ultimate losses may vary from such estimates. Management of the Bank
assesses the allowance for loan losses on a quarterly basis and will make
provisions for loan losses as deemed appropriate by management in order to
maintain the adequacy of the allowance.
For the four months ended April 30, 1997, the provision for loan
losses amounted to $4.7 million. The Bank did not make a provision for loan
losses during the four months ended April 30, 1996. The provision for loan
losses during the four months ended April 30, 1997 was based on management's
continuing review of the risk elements in the Bank's loan portfolio. In
establishing provisions in the 1997 period, management of the Bank considered
in particular the overall increase in the Bank's loan portfolio, the potential
increased risk of loss generally attributed to commercial real estate loans,
construction and land loans and commercial business loans as well as
management's continuing experience with the loan portfolio acquired from
Gateway (which constituted more than half of the Bank's total non-performing
assets at April 30, 1997), a longer than anticipated work-out period with
respect to such Gateway loans, and its consideration that, despite charge-offs
of $405,000 in the four months ended April 30, 1997 and $2.7 million in 1996,
the Bank's total non-performing loans have not been reduced but have increased
slightly since December 31, 1995. While no assurance can be given that future
charge-offs and/or additional provisions will not be necessary, management of
the Bank believes that, as of April 30, 1997, the allowance for possible loan
losses was adequate.
OTHER INCOME. Other income decreased $385,000 or 17.1% to $1.9
million for the four months ended April 30, 1997 from $2.2 million for the four
months ended April 30, 1996. Such decrease was due to a $508,000 loss on
securities transactions during the 1997 period compared
54
<PAGE> 94
to a $218,000 gain during the 1996 period. The loss on securities transactions
was due to the continued restructuring of the Bank's securities portfolio to
increase the quality and yield. As part of the restructuring, the Bank sold
$19.4 million of available for sale securities and purchased $53.3 million of
such securities. In addition, the Bank reclassified $14.6 million of
adjustable rate and intermediate mortgage funds from available for sale to
trading which resulted in the recognition of a $231,000 charge to operations
during the four months ended April 30, 1997. The loss on securities was
partially offset by an increase of $342,000 or 16.8% in service and fee income
to $2.4 million for the four months ended April 30, 1997 from $2.0 million for
the same period in 1996. The increase in service and fee income was due to an
increase in the volume of transactions as well as an increase in demand deposit
accounts.
OTHER EXPENSES. Other expenses increased $1.6 million or 12.4% to
$14.8 million for the four months ended April 30, 1997 from $13.1 million for
the same period in 1996. Such increase was primarily due to an increase of
$813,000 or 76.6% in data processing fees, an increase in other miscellaneous
expenses of $277,000 or 12.7% and an increase of $216,000 or 3.4% in personnel
expenses. The increase in data processing expenses was primarily due to the
write-off of the Bank's investment in its service bureau. The Bank is a
significant stockholder of such service bureau which was organized by a number
of New York savings banks. Given, among other things, consolidation in the
banking industry, the number of bank customers of such service bureau has
decreased significantly in recent years. In addition, the Bank and one other
New York savings bank, which has entered into an agreement to be acquired by
another institution, remain the two sole stockholders of the service bureau.
Given its assessment of the continuing viability of such service bureau, during
the four months ended April 30, 1997, the Bank wrote-off $969,000 with respect
to this investment. The increase in miscellaneous expenses was due to a
variety of increases, including expenses relating to loan collateral and real
estate owned. The increase in personnel expenses was due to normal increases
in compensation and employee benefit costs. The Bank is reevaluating its data
processing needs in general and, in particular, whether it will continue its
relationship with its current service bureau. Although it has made no
decisions with respect to how best to meet its future data processing needs,
any determination by the Bank to enhance its data processing capabilities
and/or to convert its systems to a new service bureau may result in increases
in other expenses.
PROVISION FOR INCOME TAXES. The provision for income taxes amounted
to $1.6 million and $4.7 million for the four months ended April 30, 1997 and
1996, respectively, resulting in effective tax rates of 18.6% and 40.7%,
respectively. The decrease in the provision for income taxes for the four
months ended April 30, 1997 was due to a $2.6 million reversal of previously
deferred income taxes related to bad debt reserves accumulated for New York
City purposes.
Through January 1, 1996, under Section 593 of the Code, thrift
institutions such as the Bank which met certain definitional tests, primarily
relating to their assets and the nature of their business, were permitted to
establish a tax reserve for bad debts and to make annual additions thereto,
which additions could, within specified limitations, be deducted in arriving at
their taxable income. The Bank's deduction with respect to "qualifying loans,
" which are generally loans secured by certain interests in real property, was
computed using an amount based on the
55
<PAGE> 95
Bank's actual loss experience (the "Experience Method"), or a percentage equal
to 8% of the Bank's taxable income the (the "PTI Method"), computed without
regard to this deduction and with additional modifications and reduced by the
amount of any permitted addition to the nonqualifying reserve. Similar
deductions or additions to the Bank's bad debt reserve are permitted under the
New York State Bank Franchise Tax; however, for purposes of these taxes, the
effective allowable percentage under the PTI Method was approximately 32%
rather than 8%.
Effective January 1, 1996, Section 593 was amended, and the Bank is
unable to make additions to its federal tax bad debt reserve, is permitted to
deduct bad debts only as they occur and is additionally required to recapture
or, take into taxable income, over a six year period, beginning with the Bank's
taxable year beginning on January 1, 1996, the excess of the balance of its bad
debt reserves as of December 31, 1995 over the balance of such reserves as of
December 31, 1987, or over a lesser amount if the Bank's loan portfolio has
decreased since December 31, 1987. Such recapture requirements would be
deferred for each of the two successive taxable years beginning January 1,
1996, in which the Bank originates a minimum amount of certain residential
loans based upon the average of the principal amounts of such loans originated
by the Bank during its six taxable years preceding January 1, 1996. The New
York State tax law has been amended to prevent a similar recapture of the
Bank's bad debt reserve, and to permit continued future use of the bad debt
reserve method for purposes of determining the Bank's New York State tax
liability. In connection with this change, which also provides for an
indefinite deferral of the recapture of the bad debt reserves generated for New
York State purposes, the Bank, during 1996, reversed $2.1 million of previously
deferred income taxes related to the bad debt reserves accumulated for New York
State purposes. The New York City law was amended in the first quarter of 1997
to prevent a similar recapture of the Bank's bad debt reserve, and to permit
future use of the experience method for purposes of determining the Bank's New
York City tax liability. In connection with this change, which also provided
for an indefinite deferral of the recapture of the bad debt reserves generated
for New York City purposes, during the four months ended April 30, 1997, the
Bank reversed $2.6 million of previously deferred income taxes related to the
bad debt reserves accumulated for New York City purposes.
Prior to the tax law changes mentioned above, for New York State and
New York City purposes, the bad debt deduction was equal to a multiple of the
federal bad debt deduction, which is approximately four times the federal
amount. In 1995, the Bank began providing for deferred taxes on this state and
city deduction which has accumulated since 1987. The cumulative effect of this
change in accounting principle was approximately $4.7 million and is reflected
on the statement on income for the year ended December 31, 1995.
COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1996 AND
1995.
GENERAL. The Bank reported net income of $21.8 million for the year
ended December 31, 1996 compared to net income of $13.2 million for the year
ended December 31, 1995, an increase of $8.6 million or 64.7%. The $13.2
million of net income for 1995 reflects a $4.7 million reduction due to the
cumulative effect of change in accounting for income taxes as
56
<PAGE> 96
discussed above. In addition to the absence of the $4.7 million change in
accounting for income taxes, the increase in 1996 was due to an increase in net
interest income, which was partially offset by increases in total other
expenses and the provision for income taxes. These and other significant
fluctuations in the Bank's results of operations are discussed below.
NET INTEREST INCOME. Net interest income increased $13.9 million or
23.1% to $74.0 million for 1996 compared to 1995, reflecting a $20.1 million or
19.2% increase in interest income which was partially offset by a $6.2 million
or 14.0% increase in interest expense. The Bank's interest rate spread and net
interest margin increased to 3.84% and 4.46%, respectively, for 1996 compared
to 3.63% and 4.16%, respectively, for 1995. In addition, the ratio of average
interest-earning assets to average interest-bearing liabilities increased to
120.24% for 1996 compared to 117.17% for 1995.
INTEREST INCOME. The increase in interest income during the year
ended December 31, 1996 was primarily due to an increase in the average balance
of the Bank's interest-earning assets and, to a lesser extent, the yield earned
on the Bank's securities portfolio. The average balance of the loan portfolio
increased $191.7 million or 27.4% to $891.7 million for 1996 compared to 1995
primarily as a result of the full year impact of the Gateway acquisition and,
to a lesser extent, increased loan demand, new loan products and an increased
emphasis on commercial and other lending. The average balance of the Bank's
securities portfolio increased $37.7 million or 5.4% to $737.8 million for 1996
compared to 1995 primarily as a result of the $123.5 million securities
portfolio acquired in the Gateway acquisition. The average yield earned on the
Bank's loan portfolio remained constant between 1995 and 1996 while the average
yield earned on the Bank's securities portfolio increased from 6.23% for 1995
to 6.65% for 1996. Such increase in the average yield earned on the Bank's
securities portfolio was primarily due to the restructuring of the securities
portfolio and the purchase of higher-yielding securities.
INTEREST EXPENSE. The increase in interest expense during the year
ended December 31, 1996 was primarily due to an increase in the average balance
of deposits, particularly certificates of deposit. The average balance of
deposits increased $146.2 million or 11.9% to $1.38 billion for 1996, $101.4
million of which consisted of an increase in the average balance of
certificates of deposit and $33.8 million of which consisted of an increase in
demand deposits, including noninterest-bearing checking, NOW and money market
accounts. The increase in the average balance of deposits was primarily due to
the full year impact of deposits acquired in the Gateway acquisition. The
average rate paid on deposits increased slightly from 3.58% in 1995 to 3.65% in
1996.
PROVISION FOR LOAN LOSSES. For the year ended December 31, 1996, the
provision for loan losses amounted to $1.0 million. The Bank did not make a
provision for loan losses in 1995. The provision for loan losses during 1996
was due, among other factors, management's continuing review of the risk
elements in the Bank's loan portfolio. In establishing provisions in 1996,
management of the Bank considered the overall increase in the Bank's loan
portfolio, the potential increased risk of loss generally attributed to
commercial real estate loans, construction and land loans and commercial
business loans as well as management's continuing
57
<PAGE> 97
experience with the loan portfolio acquired from Gateway and its consideration
that, despite charge-offs of $2.7 million in 1996, the Bank's total
non-performing loans had not been reduced but had increased slightly since
December 31, 1995.
OTHER INCOME. Other income amounted to $3.9 million and $4.0 million
for the years ended December 31, 1996 and 1995, respectively. The increase of
$2.3 million or 52.8% in service and fee income to $6.6 million for 1996 from
$4.3 million for 1995 was offset by a $2.4 million increase in the loss from
securities transactions to a loss of $2.7 million for 1996 from a loss of
$305,000 for 1995. The increase in service and fee income was primarily due to
an increase in the number of transaction accounts as a result of the Gateway
acquisition. The increase in the loss from securities transactions for 1996
was due primarily to a restructuring of the Bank's investment portfolio to
increase the yield of such portfolio. In particular, between September 19,
1996 and November 29, 1996, the Bank sold U.S. Government bonds with a book
value of $193.7 million and an average yield of approximately 6.2% at a loss of
$2.6 million. The Bank used such proceeds to purchase $185.7 million of U.S.
Government bonds with an average yield of 7.1%.
OTHER EXPENSES. Other expenses increased $7.1 million or 21.6% to
$40.1 million for the year ended December 31, 1996 compared to the year ended
December 31, 1995. Such increase was due to increases in personnel expenses,
occupancy and equipment, amortization of intangible assets, professional fees
and other miscellaneous expenses, which were partially offset by a decrease in
FDIC insurance premiums.
Personnel expenses increased $4.0 millon or 25.9% to $19.7 million for
1996 compared to 1995 due to an increase in personnel as a result of the
Gateway acquisition and normal merit and salary increases.
Occupancy and equipment expenses increased $1.0 million or 23.6% to
$5.4 million for 1996 compared to 1995 primarily due to the addition of three
branch offices, a loan production facility and an office for the trust
department as a result of the Gateway acquisition.
Amortization of intangible assets increased $988,000 or 85.5% to $2.1
million for 1996 compared to 1995 due primarily to the Gateway acquisition.
The excess of the purchase price over the fair value of the net assets
acquired was $15.6 million. Such amount was recorded as goodwill and is being
amortized on a straight-line basis over 20 years. The amount of goodwill
amortization for 1996 related to the Gateway acquisition was $781,000.
Professional fees increased $491,000 or 46.7% to $1.5 million for 1996
compared to 1995 primarily as a result of the use of a consulting firm to
resolve various issues from the Gateway acquisition, restructure the commercial
lending function and conduct a technology audit.
Other miscellaneous expenses increased $1.4 million or 26.9% to $6.5
million for 1996 compared to 1995 due to increases in a variety of categories,
including telephone and telecommunications, postage, insurance and legal fees
related to non-performing loans.
58
<PAGE> 98
FDIC insurance premiums decreased $1.4 million or 99.9% to $2,000 for
1996 as a result of the reduction in insurance assessment rates by the FDIC in
September 1995.
PROVISION FOR INCOME TAXES. The provision for income taxes amounted
to $15.1 million and $13.3 million for 1996 and 1995, respectively, resulting
in effective tax rates of 40.9% and 42.6%, respectively.
COMPARISON OF RESULTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1995 AND
1994
GENERAL. The Bank's net income amounted to $13.2 million for the year
ended December 31, 1995 compared to $16.2 million for the year ended December
31, 1994, a decrease of $3.0 million or 18.4%. However, the $13.2 millon of net
income for 1995 reflects a $4.7 million cumulative effect of change in
accounting for income taxes. Without such cumulative effect, net income for
1995 would have been $17.9 million. During 1995 compared to 1994, net interest
income increased $6.4 million or 11.9% and total other income increased $2.0
million or 97.3%. Such increases were partially offset by an increase in total
other expenses of $7.4 million or 28.9%. These and other significant
fluctuations in the Bank's results of operations are discussed below.
NET INTEREST INCOME. The increase in net interest income in 1995
compared to 1994 reflects an increase of $14.1 million or 15.6% in interest
income which was partially offset by an increase of $7.7 million or 21.1% in
interest expense. Although the interest rate spread remained stable at 3.63%
for 1995 compared to 3.64% for 1994, the Bank's net interest margin increased
to 4.16% for 1995 compared to 4.00% for 1994. In addition, the ratio of
average interest-earning assets to average interest-bearing liabilities
increased to 117.17% for 1995 compared to 113.05% for 1994. The increase in
such ratio reflects, in part, the Gateway acquisition which was consummated in
August 1995.
INTEREST INCOME. The increase in interest income of $14.1 million or
15.6% to $104.4 million in 1995 compared to 1994 was primarily due to an
increase in the average volume of loans outstanding and an increase in the
average yield earned on the Bank's loan and securities portfolios, which
increases were partially offset by a decrease in the average volume of
securities. The average balance of the Bank's loan portfolio increased $133.4
million or 23.6% to $700.0 million for the year ended December 31, 1995
compared to $566.5 million for the year ended December 31, 1994 as a result of
the $124.2 million of loans acquired in the Gateway acquisition as well as an
increase in loan demand. In addition, the average yield on the Bank's loan and
securities portfolios increased from 7.94% and 5.87%, respectively, in 1994 to
8.31% and 6.23%, respectively, for 1995. The increase in the average yield
earned on the Bank's loan portfolio was due primarily to the higher yielding
loans acquired in the Gateway acquisition and the adjustment of certain of the
Bank's adjustable-rate loans to the fully indexed rate. The increase in the
average yield earned on the Bank's investment securities portfolio was due to
the maturity and sales of lower yielding securities and the reinvestment of
such funds in higher yielding securities. The average balance of the
securities portfolio decreased $58.3 million or 7.7% to $700.0 million
59
<PAGE> 99
for 1995 compared to 1994. Such decrease resulted from the use of funds from
maturities and sales of certain securities to partially finance the Gateway
acquisition.
INTEREST EXPENSE. The increase in interest expense of $7.7 million or
21.1% to $44.2 million during 1995 compared to 1994 was due to both an increase
in the average balance of deposits and an increase in the average rate paid
thereon, primarily with respect to certificates of deposit. The average
balance of deposits increased $44.9 million or 3.8% to $1.23 billion for 1995
primarily as a result of deposits acquired in the Gateway acquisition. In
addition, the average rate paid on deposits increased to 3.58% for 1995
compared to 3.07% for 1994 due primarily to the increasing balance of higher
rate certificate of deposit accounts. The average balance of and rate paid on
certificate of deposit accounts were $258.3 million and 4.10%, respectively,
for 1994 and increased to 5.29% and $391.8 million, respectively, for 1995.
The increase in the average rate paid on deposits primarily reflects both an
increase in general market rates of interest and a shift into higher rate
deposit accounts.
OTHER INCOME. The increase in other income to $4.0 million for 1995
compared to $2.0 million for 1994 was due to an increase of $1.5 million or
54.8% in service and fee income and a decrease in the loss from securities
transactions to $305,000 in 1995 compared to $759,000 in 1994. The increase in
service and fee income was due to an increase in transaction accounts as a
result of the Gateway acquisition. The loss from securities transactions in
1995 was due to the Bank's restructuring of its investment portfolio. In
December 1995, the Bank sold corporate bonds with a book value of $99.1 million
and an average yield of 5.26% for a loss of $335,000. The Bank used such
proceeds to buy $99.1 million of U.S. Government agency securities with an
average yield of 6.41%.
OTHER EXPENSES. The increase in other expenses to $33.0 million in
1995 from $25.6 million in 1994 was primarily due to increases in personnel
expenses, occupancy and equipment, amortization of intangible assets,
professional fees and other miscellaneous expenses. Such increases were
partially offset by a decrease in FDIC insurance premiums.
Personnel expenses increased $4.3 million or 37.7% to $15.6 million
for 1995 compared to 1994 as a result of the additional personnel retained in
the Gateway acquisition, severance and retention bonuses related to the Gateway
acquisition and normal merit and salary increases.
Occupancy and equipment expenses increased $701,000 or 19.1% to $4.4
million in 1995 compared to 1994 primarily as a result of the addition of three
branch offices, one loan production facility and one office for the trust
department in the Gateway acquisition.
Amortization of intangible assets increased $619,000 or 115.5% to $1.2
million in 1995 compared to 1994 due primarily to $260,000 of goodwill
amortization relating to the Gateway acquisition.
Professional fees increased $417,000 or 65.8% to $1.1 million for 1995
compared to 1994 primarily as a result of an increase in consulting fees in
connection with a review of necessary
60
<PAGE> 100
lending policies and procedures, infrastructure and personnel relating to
increased commercial lending activity.
Other miscellaneous expenses increased $1.7 million or 51.7% to $5.1
million for 1995 compared to 1994 as a result of an increase in a variety of
categories primarily as the result of the acquisition of Gateway, including
postage, legal fees due to the increase in non-performing loans and checking
account supplies.
FDIC insurance fees decreased $1.4 million or 49.6% to $1.4 million in
1995 compared to 1994 due to a reduction in the assessment rate by the FDIC.
PROVISION FOR INCOME TAXES. The provision for income taxes amounted
to $13.3 million and $14.0 million for the years ended December 31, 1995 and
1994, respectively, resulting in effective tax rates of 42.6% and 46.3%,
respectively.
LIQUIDITY AND COMMITMENTS
The Bank's liquidity, represented by cash and cash equivalents, is a
product of its operating, investing and financing activities. The Bank's
primary sources of funds are deposits, amortization, prepayments and maturities
of outstanding loans and mortgage-backed securities, maturities of investment
securities and other short-term investments and funds provided from operations.
While scheduled payments from the amortization of loans and mortgage-related
securities and maturing investment securities and short-term investments are
relatively predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by general interest rates, economic conditions and
competition. In addition, the Bank invests excess funds in federal funds sold
and other short-term interest-earning assets which provide liquidity to meet
lending requirements. Historically, the Bank has been able to generate
sufficient cash through its deposits and has only utilized borrowings to a very
limited degree. During the four months ended April 30, 1997, the Bank entered
into repurchase agreements as an alternative funding source. At April 30.
1997, such borrowings amounted to $30.0 million. The Bank intends to continue
to utilize repurchase agreements and, in the future, FHLB advances, to leverage
its capital base and provide funds for its lending activities.
Liquidity management is both a daily and long-term function of
business management. Excess liquidity is generally invested in short-term
investments such as federal funds sold or U.S. Treasury securities. On a
longer term basis, the Bank maintains a strategy of investing in various
lending products as described in greater detail under "Business - Lending
Activities." The Bank uses its sources of funds primarily to meet its ongoing
commitments, to pay maturing certificates of deposit and savings withdrawals,
fund loan commitments and maintain a portfolio of mortgage-backed and
mortgage-related securities and investment securities. At April 30, 1997, the
total approved loan origination commitments outstanding amounted to $55.3
million. At the same date, the unadvanced portion of construction loans
approximated $8.1 million. Certificates of deposit scheduled to mature in one
year or less at April 30, 1997, totaled $387.6 million. Investment securities
scheduled to mature in one year or less at April 30, 1997 totalled $36.4
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<PAGE> 101
million. Based on historical experience, management believes that a
significant portion of maturing deposits will remain with the Bank. The Bank
anticipates that it will continue to have sufficient funds, together with
borrowings, to meet its current commitments.
IMPACT OF INFLATION AND CHANGING PRICES
The consolidated financial statements and related financial data
presented herein have been prepared in accordance with generally accepted
accounting principles, which require the measurement of financial position and
operating results in terms of historical dollars, without considering changes
in relative purchasing power over time due to inflation. Unlike most
industrial companies, virtually all of the Bank's assets and liabilities are
monetary in nature. As a result, interest rates generally have a more
significant impact on a financial institution's performance than does the
effect of inflation.
IMPACT OF ACCOUNTING PRONOUNCEMENTS
In May 1993, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 115, which requires
debt and equity securities to be classified in one of three categories and to
be accounted for as follows: debt securities which the company has the positive
intent and ability to hold to maturity are classified as "securities held to
maturity" and reported at amortized cost; debt and equity securities that are
bought and held principally for the purpose of selling them in the near term
are classified as "trading securities" and reported at fair value with
unrealized gains and losses included in earnings; and debt and equity
securities not classified as either held-to maturity or trading securities are
classified as "securities available for sale" and reported at fair value with
unrealized gains and losses, net of related tax effect, excluded from earnings
and reported as a separate component of shareholders' equity. The Bank adopted
SFAS No. 115 as of December 31, 1993. However, on November 15, 1995, the FASB
issued a guide to implementation of SFAS No. 115 which permitted institutions
on a one time basis, to move securities from one category to another (i.e.,
from held to maturity to available for sale) without penalty until December 31,
1995. Management of the Bank changed the classification of $314.6 million of
the Bank's securities in accordance with this pronouncement, resulting in an
unrealized gain of $1.1 million. At April 30, 1997, the unrealized
appreciation on securities available for sale, net of related taxes, amounted
to $3.5 million.
In November 1993, the AICPA issued SOP 93-6, "Employers' Accounting
for Employee Stock Ownership Plans," which is effective for years beginning
after December 15, 1993. SOP 93-6 requires the application of its guidance for
shares acquired by ESOPs after December 31, 1992 but not yet committed to be
released as of the beginning of the year SOP 93-6 is adopted. SOP 93-6 changes
the measure of compensation expense recorded by employers for leveraged ESOPs
from the cost of ESOP shares to the fair value of ESOP shares. The Company has
adopted an ESOP in connection with the Conversion, which is expected to
purchase 8% of the Common Stock sold in the Conversion. Under SOP 93-6, the
Company will recognize compensation cost equal to the fair value of the ESOP
shares during the periods in which they
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<PAGE> 102
become committed to be released. To the extent that the fair value of the
Company's ESOP shares differ from the cost of such shares, this differential
will be charged or credited to equity. Employers with internally leveraged
ESOPs such as the Company will not report the loan receivable from the ESOP as
an asset and will not report the ESOP debt from the employer as a liability.
However, the effects of SOP 93-6 on future operating results cannot be
determined at this time.
In February 1997, the FASB released SFAS No. 128 "Earnings Per Share."
SFAS No. 128 establishes standards for computing and presenting earnings per
share (EPS) and applies to entities with publicly held common stock or
potential common stock. SFAS No. 128 simplifies the standards for computing
earnings per share previously found in APB Opinion No. 15, Earnings Per Share
and makes them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS. It also requires
dual presentation of basic and diluted EPS on the face of the numerator and
denominator of the diluted EPS computation.
Basic EPS excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity. Diluted EPS is computed
similarly to fully diluted EPS pursuant to APB Opinion No. 15.
SFAS No. 128 is effective for financial statements issued for periods
ending after December 15, 1997, including interim periods; earlier application
is not permitted. SFAS No. 128 requires restatement of all prior-period EPS
data presented.
In March 1997, the FASB issued SFAS No. 129, "Disclosure of
Information About Capital Structure." Statement No. 129 continues the existing
requirements to disclose the pertinent rights and privileges of all securities
other than ordinary common stock but expands the number of companies subject to
portions of its requirements. Specifically, the Statement requires all
entities to provide the capital structure disclosures previously required by
Opinion 15. Companies that were exempt from the provisions of Opinion 15 will
now need to make those disclosures.
In July 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
Income." Statement 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general purpose
financial statements. The objective of the Statement is to report a measure of
all changes in equity of an enterprise that result from transactions and other
economic events during the period other than transactions with owners
("Comprehensive income"). Comprehensive income is the total of net income and
all other nonowner changes in equity. The Statement is effective for fiscal
years beginning after December 15, 1997 with earlier application permitted.
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<PAGE> 103
In July 1997, the FASB issued SFAS No. 131 "Disclosures About Segments
of an Enterprise and Related Information." Statement No. 131 requires
disclosures for each segment that are similar to those required under current
standards with the addition of quarterly disclosure requirements and a finer
partitioning of geographic disclosures. It requires limited segment data on a
quarterly basis. It also requires geographic data by country, as opposed to
broader geographic regions as permitted under current standards. The Statement
is effective for fiscal year beginning after December 15, 1997 with earlier
application permitted.
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<PAGE> 104
BUSINESS
GENERAL
Staten Island Savings is a traditional, full-service, community
oriented savings bank headquartered in Staten Island, New York. The Bank was
organized in 1864 as a New York-chartered savings bank and in August 1997
converted to a federally-chartered mutual savings bank. The Bank is primarily
engaged in attracting deposits from the general public and using those funds,
together with borrowings, to originate loans and invest in securities. The
Bank's primary lending emphasis has been, and continues to be, loans secured by
first liens on single-family (one- to four-units) residential properties
located in Staten Island and, to a lesser extent, Brooklyn, New York. The Bank
also originates loans secured by commercial real estate, construction and land
loans (primarily to developers operating in Staten Island), home equity loans,
multi-family residential loans and other loans. Commencing with its
acquisition of Gateway in August 1995, the Bank has diversified, to a certain
extent, its business activities by increasing its emphasis on attracting
commercial customers. In addition to continuing Gateway's traditional
commercial bank business, which emphasized commercial real estate and
construction and land loans, in recent periods the Bank has increased its
business development efforts, including the hiring of additional experienced
commercial loan officers, and has commenced a program designed to cross-sell
services to existing customers as well as attract new customers. In addition
to its loan and deposit products, the Bank also provides trust services and
savings bank life insurance ("SBLI").
MARKET AREA AND COMPETITION
The Bank maintains a network of 16 full-service branch offices located
in Staten Island and one branch office located in the Bay Ridge area of
Brooklyn, New York as well as three limited service branch offices and its
Trust Department office in Staten Island. Based on data as of June 30, 1996,
the Bank had the greatest amount of deposits of any financial institution
located in Staten Island with a 30% market share. Historically, the Bank also
has been among the leaders in loans originated in Staten Island. Because of
the Bank's significant market position in Staten Island, the Bank may consider
expansion of its branch network through the establishment of additional
branches in Brooklyn and/or entry into additional markets in New Jersey. Such
expansion, if undertaken, may be accomplished through internal growth or
acquisitions. The Bank has no specific plans, arrangements or understandings
regarding any such expansions or acquisitions at this time.
The Bank faces significant competition both in making loans and in
attracting deposits. There are a significant number of financial institutions
located within the Bank's market area, many of which have greater financial
resources than the Bank. The Bank's competition for loans comes principally
from commercial banks, other savings banks, savings associations and
mortgage-banking companies. The Bank's most direct competition for deposits
has historically come from savings associations, other savings banks,
commercial banks and credit unions. The
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<PAGE> 105
Bank faces additional competition for deposits from short-term money market
funds and other corporate and government securities funds and from other
non-depository financial institutions such as brokerage firms and insurance
companies. Competition for banking services may increase as a result of, among
other things, the elimination of restrictions on interstate operations of
financial institutions.
LENDING ACTIVITIES
GENERAL. At April 30, 1997, Staten Island Savings' total loans
amounted to $995.4 million or 53.9% of the Bank's total assets at such date.
The Bank's primary emphasis has been, and continues to be, the origination of
loans secured by first liens on single-family residences located primarily in
Staten Island and, to a lesser extent, Brooklyn and other areas in New York.
At April 30, 1997, $776.2 million or 78.0% of the Bank's total mortgage loans
were secured by properties located in Staten Island and an additional $96.3
million or 9.7% of total mortgage loans were secured by properties located in
other areas of New York.
In addition to loans secured by single-family residential real estate,
the Bank's mortgage loan portfolio includes loans secured by commercial real
estate, which amounted to $112.3 million or 11.5% of the net loan portfolio at
April 30, 1997, construction and land loans, which totaled $31.4 million or
3.2% at April 30, 1997, home equity loans, which totaled $29.9 million or 3.1%
at April 30, 1997, and loans secured by multi-family (over four units)
residential properties, which amounted to $29.0 million or 3.0% of the net loan
portfolio at April 30, 1997. In addition to mortgage loans, the Bank
originates various other loans including commercial business loans and consumer
loans. At April 30, 1997, the Bank's total other loans amounted to $37.3
million or 3.8% of the net loan portfolio.
The types of loans that the Bank may originate are subject to federal
and state law and regulations. Interest rates charged by the Bank on loans are
affected principally by the demand for such loans and the supply of money
available for lending purposes and the rates offered by its competitors. These
factors are, in turn, affected by general and economic conditions, the monetary
policy of the federal government, including the Federal Reserve Board,
legislative tax policies and governmental budgetary matters.
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<PAGE> 106
LOAN PORTFOLIO COMPOSITION. The following table sets forth the
composition of the Bank's loans at the dates indicated.
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------
April 30,
1997 1996 1995
------------------------- ----------------------- ----------------------
Percent of Percent of Percent of
Amount Total Amount Total Amount Total
------ ---------- ------ ---------- ------ ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Single-family residential:
Conventional . . . . . . . . $743,143 76.10% $707,481 73.09% $578,626 72.23%
FHA/VA . . . . . . . . . . . 12,354 1.27 13,392 1.38 16,285 2.03
Multi-family residential . . . 28,983 2.97 26,444 2.73 25,977 3.24
Commercial real estate . . . . 112,270 11.50 115,593 11.94 99,000 12.36
Construction and land . . . . . 31,417 3.22 28,779 2.97 18,123 2.26
Home equity . . . . . . . . . . 29,935 3.07 29,680 3.07 25,246 3.15
-------- ------ -------- ------ -------- ------
Total mortgage loans . . . . 958,102 98.12 921,369 95.18 763,257 95.27
Other loans:
Student loans . . . . . . . . . 4,999 0.51 4,522 0.47 6,072 0.76
Automobile leases (1) . . . . . -- -- 28,249 2.92 18,705 2.33
Passbook loans . . . . . . . . 6,382 0.65 5,933 0.61 5,683 0.71
Discounted loans . . . . . . . 7,118 0.73 6,731 0.70 5,528 0.69
Commercial business loans . . . 8,266 0.85 8,264 0.85 9,729 1.21
Other . . . . . . . . . . . . . 10,537 1.08 9,712 1.00 9,079 1.13
-------- ------ -------- ------ -------- ------
Total other loans . . . . . . 37,302 3.82 63,411 6.55 54,796 6.84
-------- ------ -------- ------ -------- ------
Total loans receivable . . . 995,404 101.94% 984,780 101.73% 818,053 102.11%
Less:
Discount on loans purchased . . (803) (0.08) (3,475) (0.36)% (2,911) (0.36)%
Allowance for loan losses . . . (14,687) (1.50) (9,977) (1.03) (10,704) (1.34)
Deferred loan fees . . . . . . (3,413) (0.35) (3,313) (0.34) (3,301) (0.41)
-------- ------ -------- ------ -------- ------
Loans receivable, net . . . . . . $976,501 100.00% $968,015 100.00% $801,137 100.00%
- ------------- ======= ====== ======= ====== ======= ======
</TABLE>
<TABLE>
<CAPTION>
December 31,
----------------------------------------------------------------------------------------
1994 1993 1992
------------------------ ------------------------- ------------------------
Percent of Percent of Percent of
Amount Total Amount Total Amount Total
------ --------- ------ --------- ------ ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Single-family residential:
Conventional . . . . . . . . $478,848 78.63% $394,892 76.86% $330,470 72.63%
FHA/VA . . . . . . . . . . . 19,165 3.15 24,027 4.68 30,588 6.72
Multi-family residential . . . 24,347 4.00 24,190 4.71 19,367 4.26
Commercial real estate . . . . 30,037 4.93 26,002 5.06 25,534 5.61
Construction and land . . . . . 3,003 0.49 2,626 0.51 2,150 0.47
Home equity . . . . . . . . . . 18,042 2.96 12,548 2.44 12,616 2.77
-------- ------ -------- ------ -------- ------
Total mortgage loans . . . . 573,442 94.17 484,285 94.25 420,725 92.46
Other loans:
Student loans . . . . . . . . . 23,398 3.84 22,607 4.40 22,691 4.99
Automobile leases (1) . . . . . 8,344 1.37 -- -- -- --
Passbook loans . . . . . . . . 4,673 0.77 3,927 0.76 4,464 0.98
Discounted loans . . . . . . . -- 0.00 -- -- -- --
Commercial business loans . . . 200 0.03 -- -- -- --
Other . . . . . . . . . . . . . 5,972 0.98 8,601 1.67 11,545 2.54
-------- ------ -------- ------ -------- ------
Total other loans . . . . . . 42,587 6.99 35,135 6.84 38,700 8.51
-------- ------ -------- ------ -------- ------
Total loans receivable . . . 616,029 101.16% 519,420 101.09% 459,725 100.98%
Less:
Discount on loans purchased . . (1,134) (0.19)% (15) --% (6) --%
Allowance for loan losses . . . (3,124) (0.51) (3,180) (0.62) (2,303) (0.51)
Deferred loan fees . . . . . . (2,817) (0.46) (2,422) (0.47) (2,134) (0.47)
-------- ------ ------- ------ -------- ------
Loans receivable, net . . . . . . $608,954 100.00% $513,803 100.00% $454,982 100.00%
- ------------- ======= ====== ======= ====== ======= ======
</TABLE>
(1) Consists of loans secured by assignments of automobile lease payments.
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<PAGE> 107
CONTRACTUAL PRINCIPAL REPAYMENTS AND INTEREST RATES. The following
table sets forth scheduled contractual amortization of the Bank's loans at
April 30, 1997, as well as the dollar amount of such loans which are scheduled
to mature after one year which have fixed or adjustable interest rates. Demand
loans, loans having no schedule of repayments and no stated maturity and
overdraft loans are reported as due in one year or less.
<TABLE>
<CAPTION>
Principal Repayments Contractually Due
in Year(s) Ended April 30,
--------------------------------------
Total at
April 30,
1997 1998 1999 2000
--------- -------- -------- --------
(In Thousands)
<S> <C> <C> <C> <C>
Mortgage loans:
Single-family residential . . . . . $755,497 $16,047 $16,372 $17,689
Multi-family residential . . . . . 28,983 1,033 1,131 1,238
Commercial real estate . . . . . . 112,270 5,303 5,847 6,447
Construction and land . . . . . . . 31,417 28,324 -- --
Home equity . . . . . . . . . . . . 29,935 1,828 1,964 2,081
Other loans . . . . . . . . . . . . . 37,302 19,892 5,275 3,765
-------- ------- ------- -------
Total(1) . . . . . . . . . . . . $995,404 $72,427 $30,589 $31,220
======= ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
Principal Repayments Contractually Due
in Year(s) Ended April 30,
---------------------------------------------------
2001- 2003- 2009- There-
2002 2008 2014 after
-------- -------- -------- ---------
(In Thousands)
<S> <C> <C> <C> <C>
Mortgage loans:
Single-family residential . . . . . $39,765 $46,427 $ 81,298 $537,899
Multi-family residential . . . . . 2,838 3,400 6,407 12,936
Commercial real estate . . . . . . 14,944 18,086 31,449 30,194
Construction and land . . . . . . . -- -- -- 3,093
Home equity . . . . . . . . . . . . 4,299 4,432 5,038 10,293
Other loans . . . . . . . . . . . . . 3,013 230 114 5,013
------- -------- -------- --------
Total(1) . . . . . . . . . . . . $64,859 $72,575 $124,306 $599,428
====== ====== ======= =======
</TABLE>
- ------------------
(1) Of the $923.0 million of loan principal repayments contractually due
after April 30, 1998, $519.7 million have fixed rates of interest and
$403.3 million have adjustable rates of interest.
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<PAGE> 108
Scheduled contractual amortization of loans does not reflect the
expected term of the Bank's loan portfolio. The average life of loans is
substantially less than their contractual terms because of prepayments and
due-on-sale clauses, which give the Bank the right to declare a conventional
loan immediately due and payable in the event, among other things, that the
borrower sells the real property subject to the mortgage and the loan is not
repaid. The average life of mortgage loans tends to increase when current
mortgage loan rates are higher than rates on existing mortgage loans and,
conversely, decrease when rates on existing mortgage loans are lower than
current mortgage loan rates (due to refinancing of adjustable-rate and
fixed-rate loans at lower rates). Under the latter circumstance, the weighted
average yield on loans decreases as higher yielding loans are repaid or
refinanced at lower rates.
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<PAGE> 109
ACTIVITY IN LOANS. The following table shows the activity in the
Bank's loans during the periods indicated.
<TABLE>
<CAPTION>
Year Ended December 31,
Four Months Ended -------------------------------------
April 30, 1997 1996 1995 1994
----------------- ----------- ----------- -----------
(In Thousands)
<S> <C> <C> <C> <C>
Total loans held at beginning
of period . . . . . . . . . . . . . . $984,780 $818,053 $616,029 $519,420
Originations of loans:
Mortgage loans:
Single-family residential . . . . . 56,590 181,200 105,359 120,190
Multi-family residential . . . . . 3,155 2,087 3,587 5,832
Commercial real estate . . . . . . 4,882 35,677 13,557 6,083
Construction and land . . . . . . . 11,250 32,080 15,425 1,654
Home equity . . . . . . . . . . . . 853 1,224 887 1,113
Other loans:
Student loans . . . . . . . . . . . 1,620 3,469 3,449 10,517
Automobile leases . . . . . . . . . 3,697 14,078 13,000 8,829
Passbook loans . . . . . . . . . . 2,471 5,995 5,926 5,303
Discounted loans . . . . . . . . . 387 1,203 5,528 --
Commercial business loans . . . . . 3,041 7,806 2,766 200
Other consumer loans(1) . . . . . . 1,944 3,131 1,236 5,281
------- ------ ------- --------
Total originations . . . . . . . 89,890 287,950 170,720 165,002
Purchases of loans:
Mortgage loans:
Single-family residential . . . . -- -- 39,172 699
Multi-family residential . . . . . -- -- 319 --
Commercial real estate . . . . . . -- -- 60,495 --
Construction and land . . . . . . . -- -- 15,925 --
Home equity . . . . . . . . . . . . -- -- -- --
Other loans:
Student loans . . . . . . . . . . . -- -- -- --
Automobile leases . . . . . . . . . -- -- -- --
Passbook loans . . . . . . . . . . -- -- -- --
Discounted loans . . . . . . . . . -- -- 7,456 --
Commercial business loans . . . . . -- -- 8,947 --
Other consumer loans . . . . . . . -- -- 2,517 --
---------- ---------- -------- --------
Total purchases . . . . . . . . . -- -- 134,831(2) 699
---------- ---------- -------- --------
Total originations and purchases
Loans sold:
Mortgage loans:
Single-family residential . . . . . 410 -- -- --
Multi-family residential . . . . . -- -- -- --
Commercial real estate . . . . . . -- -- -- --
Construction and land . . . . . . . -- -- -- --
Home equity . . . . . . . . . . . . -- -- -- --
Other loans:
Student loans . . . . . . . . . . . 838 3,340 21,858 --
Automobile leases . . . . . . . . . -- -- -- --
Passbook loans . . . . . . . . . . -- -- -- --
Discounted loans . . . . . . . . . -- -- -- --
Commercial business loans . . . . . -- -- -- --
Other consumer loans . . . . . . . -- -- -- --
-------- -------- -------- --------
Total sold . . . . . . . . . . . 1,248 3,340 21,858 --
Transfers to real estate owned . . 725 1,629 1,147 373
Charge-offs . . . . . . . . . . . . . . 293 2,373 615 277
Repayments . . . . . . . . . . . . . . 77,000 113,881 79,907 68,442
-------- -------- -------- --------
Net activity in loans . . . . . . . . . 10,624 166,727 202,024 96,609
-------- -------- -------- --------
Gross loans held at end of period . . . $995,404 $984,780 $818,053 $616,029
- ------------ ======== ======== ======== ========
</TABLE>
(1) Includes amounts drawn on overdraft accounts.
(2) Includes $124.2 million of loans acquired from Gateway.
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<PAGE> 110
The lending activities of Staten Island Savings are subject to written
underwriting standards and loan origination procedures established by the
Bank's Board of Trustees and management. Applications for mortgage and other
loans are taken at all of the Bank's branch offices. In addition, the Bank's
business development officers, loan officers and branch managers call on
individuals in the Bank's market area in order to solicit new loan originations
as well as other banking relationships. The Bank also relies on independent
mortgage brokers, a group of whom are authorized to accept and process
mortgage loan applications on the Bank's behalf, and a non-employee commercial
loan solicitor in order to obtain new loan applications. All loan applications
are forwarded to the Bank's loan origination center for underwriting and
approval. The Bank's employees at the loan origination center supervise the
process of obtaining credit reports, appraisals and other documentation
involved with a loan. The Bank requires that a property appraisal be obtained
in connection with all new mortgage loans. Property appraisals are performed
by an independent appraiser from a list approved by the Bank's Board of
Trustees. Staten Island Savings requires that title insurance and hazard
insurance be maintained on all security properties (except for home equity
loans) and that flood insurance be maintained if the property is within a
designated flood plain.
Certain officers of the Bank have been authorized by the Board of
Trustees to approve loans up to certain designated amounts. Provided that the
total amount outstanding to a borrower would not exceed $8.9 million, the Loan
Review Committee of the Board of Trustees must approve all loans where new
monies advanced would increase borrowers or guarantors total outstanding credit
with the Bank above $750,000. Loans in excess of $2.5 million must be approved
by the full Board of Trustees of the Bank.
A federal savings association generally may not make loans to one
borrower and related entities in an amount which exceeds 15% of its unimpaired
capital and surplus, although loans in an amount equal to an additional 10% of
unimpaired capital and surplus may be made to a borrower if the loans are fully
secured by readily marketable securities. However, with certain exceptions,
the Bank generally has adhered to a more restrictive limit of loans to one
borrower and related entities of 5% of the Bank's net worth or $8.9 million at
April 30, 1997. At such date, the Bank had one relationship in excess of its
internal lending limit consisting of an aggregate of $12.3 million of loans to
a local developer and related persons or entities, all of which were performing
in accordance with their terms at April 30, 1997. Subsequent to the
Conversion, the Bank may reconsider its internal lending limit due to its
increased capital, but does not currently anticipate increasing such limit to
an amount significantly more than the current dollar limit.
SINGLE-FAMILY RESIDENTIAL AND HOME EQUITY LOANS. Substantially all of
the Bank's single-family residential mortgage loans consist of conventional
loans. Conventional loans are loans that are neither insured by the Federal
Housing Administration ("FHA") or partially guaranteed by the Department of
Veterans Affairs ("VA"). The vast majority of the Bank's single-family
residential mortgage loans are secured by properties located in Staten Island
and, to a lesser extent, Brooklyn and other areas of New York. Historically,
the Bank has retained substantially all mortgage loans which it has originated
and has not
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<PAGE> 111
engaged in sales of residential mortgage loans. As of April 30, 1997, $755.5
million, or 77.4%, of the Bank's net loans consisted of single-family
residential mortgage loans. The Bank originated $56.6 million of single-family
residential mortgage loans in the four months ended April 30, 1997 and $181.2
million, $105.4 million and $120.2 million in 1996, 1995 and 1994, respectively.
The Bank anticipates that a significant portion of its future new loan
originations will continue to be single-family residential mortgage loans.
The Bank's residential mortgage loans have either fixed rates of
interest or interest rates which adjust periodically during the term of the
loan. Fixed-rate loans generally have maturities ranging from 15 to 30 years
and are fully amortizing with monthly or bi-monthly loan payments sufficient to
repay the total amount of the loan with interest by the end of the loan term.
The Bank's fixed-rate loans generally are originated under terms, conditions
and documentation which permit them to be sold to U.S. Government-sponsored
agencies, such as the Federal Home Loan Mortgage Corporation ("FHLMC"), and
other investors in the secondary market for mortgages. At April 30, 1997,
$448.7 million, or 59.4%, of the Bank's single-family residential mortgage
loans were fixed-rate loans. Substantially all of the Bank's single-family
residential mortgage loans contain due-on-sale clauses, which permit the Bank
to declare the unpaid balance to be due and payable upon the sale or transfer
of any interest in the property securing the loan. The Bank enforces such
due-on-sale clauses.
The adjustable-rate single-family residential mortgage ("ARM") loans
currently offered by the Bank have interest rates which adjust every one, three
or five years in accordance with a designated index such as one-, three- or
five-year U.S. Treasury obligations adjusted to a constant maturity ("CMT"),
plus a stipulated margin. In addition, the Bank offers an ARM with a
fixed-rate for the first ten years and which adjusts on an annual basis
thereafter. At April 30, 1997, the Bank's five-year and ten-year ARM loans
amounted to $170.2 million and $32.2 million, respectively. The Bank's
adjustable-rate single-family residential real estate loans generally have a
cap of 2% or 3% on any increase or decrease in the interest rate at any
adjustment date, and include a specified cap on the maximum interest rate over
the life of the loan, which cap generally is 5% or 6% above the initial rate.
From time to time, based on prevailing market conditions, the Bank may offer
ARM loans with initial rates which are below the fully indexed rate. Such
loans generally are underwritten based on the fully indexed rate. The Bank's
adjustable-rate loans require that any payment adjustment resulting from a
change in the interest rate of an adjustable-rate loan be sufficient to result
in full amortization of the loan by the end of the loan term and, thus, do not
permit any of the increased payment to be added to the principal amount of the
loan, or so-called negative amortization. At April 30, 1997, $306.8 million or
40.6% of the Bank's single-family residential mortgage loans were
adjustable-rate loans.
Adjustable-rate loans decrease the risks associated with changes in
interest rates but involve other risks, primarily because as interest rates
increase, the loan payment by the borrower increases to the extent permitted by
the terms of the loan, thereby increasing the potential for default. Moreover,
as with fixed-rate loans, as interest rates increase, the marketability of the
underlying collateral property may be adversely affected by higher interest
rates. The Bank believes that these risks, which have not had a material
adverse
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<PAGE> 112
effect on the Bank to date, generally are less than the risks associated with
holding fixed-rate loans in an increasing interest rate environment.
The volume and types of ARMs originated by the Bank have been affected
by such market factors as the level of interest rates, competition, consumer
preferences and availability of funds. In recent periods, demand for
single-family ARMs has been relatively weak due to the prevailing low interest
rate environment and consumer preference for fixed-rate loans. Accordingly,
although the Bank will continue to offer single-family ARMs, there can be no
assurance that in the future the Bank will be able to originate a sufficient
volume of single-family ARMs to increase or maintain the proportion that these
loans bear to total loans.
The Bank's single-family residential mortgage loans generally do not
exceed $500,000. In addition, the maximum loan-to-value ("LTV") ratio for the
Bank's single-family residential mortgage loans generally is 95% of the
appraised value of the security property, provided, however, that private
mortgage insurance is obtained on the portion of the principal amount that
exceeds 80% of the appraised value.
At April 30, 1997, the Bank's home equity loans amounted to $29.9
million or 3.1% of the Bank's net loans. The preponderance of the Bank's home
equity loans are structured as fixed-rate, fixed-term loans, although the Bank
also offers floating rate home equity lines of credit. Home equity loans, like
single-family residential mortgage loans, are secured by the underlying equity
in the borrower's residence. However, the Bank generally obtains a second
mortgage position to secure its home equity loans. The Bank's home equity
loans generally require LTV ratios of 80% or less after taking into
consideration any first mortgage loan.
COMMERCIAL REAL ESTATE LOANS AND MULTI-FAMILY RESIDENTIAL LOANS. At
April 30, 1997, the Bank's commercial real estate loans and multi-family
residential mortgage loans amounted to $112.3 million and $29.0 million,
respectively, or 11.5% and 3.0%, respectively, of the Bank's net loan
portfolio. A substantial portion of the Bank's commercial real estate loans
were acquired from Gateway. While the Bank retained all of the commercial loan
personnel from Gateway, the Bank has revised and strengthened the loan
underwriting standards with respect to commercial real estate and multi-family
residential mortgage loans.
The Bank's commercial real estate loans generally are secured by small
office buildings, retail and industrial use buildings, strip shopping centers
and other commercial uses located in the Bank's market area. The Bank's
commercial real estate loans seldom exceed $1.0 million and, as of April 30,
1997, the average size of the Bank's commercial real estate loans was $305,000.
The Bank originated $4.8 million of commercial real estate loans during the
four months ended April 30, 1997 compared to $35.7 million, $13.6 million and
$6.1 million, respectively, of commercial real estate loan originations in
1996, 1995 and 1994.
The Bank's multi-family residential real estate loans are concentrated
in Brooklyn and, to a lesser extent, Staten Island. The Bank originated $3.2
million of multi-family
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<PAGE> 113
residential real estate loans during the four months ended April 30, 1997
compared to $2.1 million, $3.6 million and $5.8 million, respectively, of
originations in 1996, 1995 and 1994. The Bank generally has not been a
substantial originator of multi-family residential real estate loans due to,
among other factors, the relatively limited amount of apartment and other
multi-family properties in Staten Island.
The Bank's commercial real estate and multi-family residential loans
generally are three- or five-year adjustable-rate loans indexed to three-or
five-year U.S. Treasury obligations adjusted to a CMT, plus a margin.
Generally, fees of between 50 basis points and 1.50% of the principal loan
balance are charged to the borrower upon closing. The Bank generally charges
prepayment penalties on commercial real estate and multi-family residential
mortgage loans. Although terms for multi-family residential and commercial
real estate loans may vary, the Bank's underwriting standards generally provide
for terms of up to 25 years with amortization of principal over the term of the
loan and LTV ratios of not more than 75%. Generally, the Bank obtains personal
guarantees of the principals as additional security for any commercial real
estate and multi-family residential loans.
The Bank evaluates various aspects of commercial and multi-family
residential real estate loan transactions in an effort to mitigate risk to the
extent possible. In underwriting these loans, consideration is given to the
stability of the property's cash flow history, future operating projections,
current and projected occupancy, position in the market, location and physical
condition. The Bank has also generally imposed a debt coverage ratio (the
ratio of net cash from operations before payment of debt service to debt
service) of not less than 125%. The underwriting analysis also includes credit
checks and a review of the financial condition of the borrower and guarantor,
if applicable. An appraisal report is prepared by an independent appraiser
commissioned by the Bank to substantiate property values for every commercial
real estate and multi-family loan transaction. All appraisal reports are
reviewed by the Bank prior to the closing of the loan.
Commercial real estate and multi-family residential lending entails
substantially different risks when compared to single-family residential
lending because such loans often involve large loan balances to single
borrowers and because the payment experience on such loans is typically
dependent on the successful operation of the project or the borrower's
business. These risks can also be significantly affected by supply and demand
conditions in the local market for apartments, offices, warehouses, or other
commercial space. The Bank attempts to minimize its risk exposure by limiting
such lending to proven businesses, only considering properties with existing
operating performance which can be analyzed, requiring conservative debt
coverage ratios, and periodically monitoring the operation and physical
condition of the collateral.
As of April 30, 1997, $8.9 million or 7.9% of the Bank's commercial
real estate loans and $1.5 million or 5.0% of its multi-family residential real
estate loans were considered non-performing loans.
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<PAGE> 114
CONSTRUCTION AND LAND LOANS. The Bank originates primarily
residential construction loans to local (primarily Staten Island) real estate
builders, generally with whom it has an established relationship. To a
significantly lesser extent, the Bank originates such loans to individuals who
have a contract with a builder for the construction of their residence. The
Bank's construction loans are secured by property located primarily in the
Bank's market area. At April 30, 1997, construction and land loans amounted to
$31.4 million or 3.2% of the Bank's net loan portfolio of which $20.6 million
consisted of construction loans and $10.5 million consisted of land loans. In
addition, at such date, the Bank had $8.1 million of undisbursed funds for
construction loans in process. The Bank originated $11.3 million of
construction and land loans during the four months ended April 30, 1997,
compared to $32.1 million, $15.4 million and $1.7 million of construction loans
in 1996, 1995 and 1994, respectively. Prior to its acquisition of Gateway, the
Bank generally was not an active originator of construction and land loans.
The Bank's construction loans generally have floating rates of
interest for a term of up to two years. Construction loans to builders are
typically made with a maximum loan to value ratio of 75%. The Bank's
construction loans to local builders are made on either a pre-sold or
speculative (unsold) basis. However, the Bank generally limits the number of
unsold homes under construction to its builders, with the amount dependent on
the reputation of the builder, the present outstanding obligations of the
builder, the location of the property and prior sales of homes in the
development and the surrounding area. The Bank generally limits the number of
construction loans for speculative units to two to four model homes per
project.
Prior to making a commitment to fund a construction loan, the Bank
requires an appraisal of the property by independent appraisers approved by the
Board of Trustees. The Bank's staff also reviews and inspects each project at
the commencement of construction and prior to every disbursement of funds
during the term of the construction loan. Loan proceeds are disbursed after
inspections of the project based on a percentage of completion. The Bank
requires monthly interest payments during the construction term.
The Bank originates land loans to local developers for the purpose of
holding or developing the land (i.e., roads, sewer and water) for sale. Such
loans are secured by a lien on the property, are generally limited to 60% of
the appraised value of the secured property and are typically made for a period
of up to two years with a floating interest rate based on the prime rate. The
Bank requires monthly interest payments during the term of the land loan. The
principal of the loan is reduced as lots are sold and released. All of the
Bank's land loans are secured by property located in its market area. In
addition, the Bank generally obtains personal guarantees from its borrowers and
originates such loans to developers with whom it has established relationships.
Construction and land lending generally is considered to involve a
higher level of risk as compared to permanent single-family residential
lending, due to the concentration of principal in a limited number of loans and
borrowers and the effects of general economic conditions on developers and
builders. Moreover, a construction loan can involve additional
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<PAGE> 115
risks because of the inherent difficulty in estimating both a property's value
at completion of the project and the estimated cost (including interest) of the
project. The nature of these loans is such that they are generally more
difficult to evaluate and monitor. In addition, speculative construction loans
to a builder are not pre-sold and thus pose a greater potential risk to the
Bank than construction loans to individuals on their personal residences.
The Bank has attempted to minimize the foregoing risks by, among other
things, limiting the extent of its construction and land lending generally and
by limiting its construction and land lending to primarily residential
properties. In addition, the Bank has adopted underwriting guidelines which
impose lower loan-to-value and higher debt service ratios than typically
utilized by Gateway and other requirements for loans which are believed to
involve higher elements of credit risk, by limiting the geographic area in
which the Bank will do business to its existing market and by working with
builders with whom it has established relationships. It is also the Bank's
policy to obtain personal guarantees from the principals of its corporate
borrowers on its construction and land loans.
OTHER LOANS. The Bank offers a variety of other or non-mortgage
loans. Such other loans, which include commercial business loans, discounted
loans, passbook loans, student loans, overdraft loans and a variety of other
personal loans, amounted to $37.3 million or 3.8% of the Bank's loan portfolio
at April 30, 1997. Prior to [APRIL] 1997, the Bank engaged in a program of
advancing funds to a national automobile leasing company on a non-recourse
basis, with the Bank's advances secured by a pledge and assignment of the
leasing company's interests in automobile leases made to its customers. Under
the program, the leasing company extended automobile leases to customers and
then presented such leases to the Bank for its underwriting, document review
and acceptance or rejection. The Bank only accepted lease assignments which
met the Bank's underwriting guidelines. The leasing company recently was
purchased by another financial institution which resulted in a termination of
the Bank's automobile leasing activities during the four months ended April 30,
1997 and the repayment of the $29.8 million of loans secured by automobile
leases then outstanding at no loss to the Bank.
At April 30, 1997, the Bank's commercial business loans amounted to
$8.3 million or 0.9% of the Bank's loan portfolio. The Bank's commercial
business loans have a term of up to five years and may have either fixed-rates
of interest or, to a lesser extent, floating rates tied to the prime rate. The
Bank's commercial business loans are made to small- to medium-sized businesses
within the Bank's market area. A substantial portion of the Bank's small
business loans are unsecured with the remainder generally secured by perfected
security interests in accounts receivable and inventory or other corporate
assets. In addition, the Bank generally obtains personal guarantees from the
principals of the borrower with respect to all commercial business loans. In
addition, the Bank may extend loans for a commercial business purpose which are
secured by a mortgage on the proprietor's home or the business property. In
such cases, the loan, while underwritten to commercial business loan standards,
is reported as a single-family or commercial real estate mortgage loan, as the
case may be. The Bank estimates that, at April 30, 1997, it had $23.9 million
and $112.3 million outstanding in loans for commercial business purposes which
were classified as
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<PAGE> 116
single-family residential mortgage loans and commercial real estate mortgage
loans, respectively. Commercial business loans generally are deemed to involve
a greater degree of risk than single-family residential mortgage loans. See
"Risk Factors - Risks Related to Commercial Real Estate Loans, Construction and
Land Loans and Commercial Business Loans."
The Bank's other loans also include discounted loans, which amounted
to $7.1 million or 0.7% of the Bank's loans at such date. The Bank's
discounted loans, which are made primarily to local businesses, are designed to
provide an interim source of financing and require no payment of principal or
interest until the due date of the loan, which may be up to one year but
generally is 60 or 90 days from the date of origination. While the borrower is
contractually obligated to repay the entire face amount of the loan at
maturity, the Bank advances only a portion of the face amount with the
difference constituting the interest component. In addition to personal
guarantees, discounted loans may also be secured by perfected security
interests in receivables. However, due to the lack of an amortization schedule
and, in certain cases, the absence of perfected security interests, discounted
loans generally may be deemed to involve a greater risk of loss than
single-family residential mortgage loans.
At April 30, 1997, the Bank had $5.0 million of student loans in
portfolio. The Bank has been and continues to be an active originator of
student loans. Substantially, all of these loans are originated under the
auspices of the New York State Higher Education Services Corporation
("NYSHESC"). Under the terms of these loans, no repayment is due until the
student's graduation, with 98% of the principal guaranteed by the NYSHESC. The
terms and rates of these loans are established by the NYSHESC. Commencing in
1995, the Bank's general practice is to sell its student loans into the
secondary market as the loans reach repayment status.
The balance of the Bank's other loans consist of loans secured by
passbook accounts, loans on overdraft accounts, home improvement loans and
various other personal loans.
LOAN ORIGINATION AND LOAN FEES. In addition to interest earned on
loans, the Bank receives loan origination fees or "points" for many of the
loans it originates. Loan points are a percentage of the principal amount of
the mortgage loan and are charged to the borrower in connection with the
origination of the loan.
In accordance with SFAS No. 91, which addresses the accounting for
non-refundable fees and costs associated with originating or acquiring loans,
the Bank's loan origination fees and certain related direct loan origination
costs are offset, and the resulting net amount is deferred and amortized as
interest income over the contractual life, adjusted for prepayments, of the
related loans as an adjustment to the yield of such loans. At April 30, 1997,
the Bank had $3.4 million of such deferred loan fees.
ASSET QUALITY
GENERAL. As a part of the Bank's efforts to improve its asset
quality, it has developed and implemented an asset classification system. All
of the Bank's assets are subject to review under this classification system.
Loans are periodically reviewed and the classifications are reviewed by the
Board of Trustees on at least a quarterly basis. In addition, the Bank has
retained an independent third party consultant to, among other things, review
the Bank's classifications on a periodic basis.
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<PAGE> 117
When a borrower fails to make a required payment on a loan, the Bank
attempts to cure the deficiency by contacting the borrower and seeking payment.
Contacts are generally made 16 days after a payment is due. In most cases,
deficiencies are cured promptly. If a delinquency continues, late charges are
assessed and additional efforts are made to collect the loan. While the Bank
generally prefers to work with borrowers to resolve such problems, when the
account becomes 90 days delinquent, the Bank institutes foreclosure or other
proceedings, as necessary, to minimize any potential loss.
Loans are placed on non-accrual status when, in the judgment of
management, the probability of collection of interest is deemed to be
insufficient to warrant further accrual. When a loan is placed on non-accrual
status, previously accrued but unpaid interest is deducted from interest
income. As a matter of policy, the Bank does not accrue interest on loans past
due 90 days or more. See Note 1 of the Notes to Consolidated Financial
Statements.
Real estate acquired by the Bank as a result of foreclosure or by
deed-in-lieu of foreclosure is classified as real estate owned until sold.
Pursuant to SOP 92-3 issued by the AICPA in April 1992, which provides guidance
on determining the balance sheet treatment of foreclosed assets in annual
financial statements for periods ending on or after December 15, 1992, there is
a rebuttable presumption that foreclosed assets are held for sale and such
assets are recommended to be carried at the lower of fair value minus estimated
costs to sell the property, or cost (generally the balance of the loan on the
property at the date of acquisition). After the date of acquisition, all costs
incurred in maintaining the property are expensed and costs incurred for the
improvement or development of such property are capitalized up to the extent of
their net realizable value. The Bank's accounting for its real estate owned
complies with the guidance set forth in SOP 92-3.
DELINQUENT LOANS. The following table sets forth information
concerning delinquent mortgage loans at April 30, 1997, in dollar amounts and
as a percentage of each category of the Bank's loan portfolio. The amounts
presented represent the total outstanding principal balances of the related
loans, rater than the actual payment amounts which are past due.
<TABLE>
<CAPTION>
April 30, 1997
-----------------------------------------------------------------
30-59 Days 60-89 Days
------------------------------ ------------------------------
Percent of Loan Percent of Loan
Amount Category Amount Category
---------- --------------- ---------- ---------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Mortgage loans:
Residential:
Single-family . . . . . . . . . $5,523 0.73% $3,272 0.43%
Multi-family . . . . . . . . . 113 0.39 421 1.45
Commercial real estate . . . . . 2,112 1.88 862 0.77
Construction and land . . . . . . -- -- -- --
Home equity . . . . . . . . . . . 164 .55 302 1.00
------ ------
Total . . . . . . . . . . . . . $7,912 .83% $4,857 0.51%
====== ======
</TABLE>
In addition to delinquent mortgage loans, at April 30, 1997, $1.2
million or 3.2% of the Bank's other loans were delinquent 30 days or more but
less than 90 days.
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NON-PERFORMING ASSETS. The following table sets forth information
with respect to non-performing assets identified by the Bank, including
non-accrual loans and other real estate owned.
<TABLE>
<CAPTION>
At December 31,
At April 30, -----------------------------------------------------------------
1997 1996 1995(1) 1994 1993 1992
-------------- -------- ---------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Accruing loans 90 days or more
past due:
Mortgage loans . . . . . . . $ -- $ -- $ -- $ -- $ -- $ --
Other loans . . . . . . . . . -- 1 302 415 262 544
--------- --------- --------- --------- --------- ---------
Total accruing loans -- 1 302 415 262 544
--------- --------- --------- --------- --------- ---------
Non-accrual loans:
Mortgage loans:
Single-family residential 9,984 10,417 11,159 6,692 7,240 3,848
Multi-family residential 1,461 322 98 86 58 --
Commercial real estate . 8,876 11,102 11,653 560 -- --
Construction and land . . 2,714 -- 379 240 -- --
Home equity . . . . . . . 556 644 124 -- -- 132
Other loans:
Automobile leases . . . . -- 15 18 -- -- --
Commercial business loans 300 81 49 -- -- --
Discounted loans . . . . 247 25 126 -- -- --
Other loans . . . . . . . 277 144 307 61 157 191
-------- --------- --------- --------- --------- ---------
Total non-accruing
loans . . . . . . 24,415 22,750 23,913 7,639 7,455 4,169
-------- --------- --------- --------- --------- ---------
Total non-performing loans . . . 24,415 22,751 24,215 8,054 7,717 4,713
-------- --------- --------- --------- --------- ---------
Other real estate owned, net . . 1,317 1,103 627 373 766 1,755
-------- --------- --------- --------- --------- ---------
Total non-performing assets . . . 25,732 23,854 24,842 8,427 8,483 6,468
-------- --------- --------- --------- --------- ---------
Total non-performing assets . . . $ 25,732 $ 23,854 $ 24,842 $ 8,427 $ 8,483 $ 6,468
======== ======== ======== ======== ======== ========
Non-performing assets to total
loans . . . . . . . . . . . . . 2.59% 2.42% 3.04% 1.37% 1.63% 1.41%
Non-performing assets to total
assets . . . . . . . . . . . . 1.39% 1.34% 1.44% 0.61% 0.62% 0.48%
Non-performing loans to total
loans . . . . . . . . . . . . . 2.45% 2.31% 2.96% 1.31% 1.49% 1.03%
Non-performing loans to total
assets . . . . . . . . . . . . 1.32% 1.28% 1.40% 0.59% 0.57% 0.35%
</TABLE>
- ------------------
(1) The acquisition of Gateway occurred in August 1995.
The primary reason for the increase in non-performing assets at April
30, 1997 and December 31, 1996 and 1995 compared to earlier periods was the
continuing non-performance of certain loans obtained as part of the
acquisition of Gateway. Of the Bank's $25.7 million of non-performing assets
at April 30, 1997, $14.3 million or 55.5% relate to loans underwritten by
Gateway and acquired by the Bank in August 1995. Gateway was an active
originator of commercial real estate loans, construction and land loans and, to
a lesser extent, commercial business loans, all of which generally are deemed
to involve more risk than the single-family residential loans which the Bank
traditionally has emphasized. While the Bank has continued to originate
commercial real estate loans, construction and land loans and commercial
business loans, and intends to increase its level of originations of such
loans, management has implemented loan underwriting policies and procedures
which it believes are more conservative than those previously utilized by
Gateway.
The interest income that would have been recorded during the four
months ended April 30, 1997 and the year ended December 31, 1996, if all of the
Bank's non-performing
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<PAGE> 119
loans at the end of such period had been current in accordance with their terms
during such periods was $504,000 and $696,000, respectively. The actual amount
of interest recorded as income (on a cash basis) on such loans during the
periods amounted to $141,000 and $925,000, respectively.
CLASSIFIED AND CRITICIZED ASSETS. Federal regulations require that
each insured institution classify its assets on a regular basis. Furthermore,
in connection with examinations of insured institutions, federal examiners have
authority to identify problem assets and, if appropriate, classify them. There
are three classifications for problem assets: "substandard," "doubtful" and
"loss." Substandard assets have one or more defined weaknesses and are
characterized by the distinct possibility that the insured institution will
sustain some loss if the deficiencies are not corrected. Doubtful assets have
the weaknesses of substandard assets with the additional characteristic that
the weaknesses make collection or liquidation in full on the basis of currently
existing facts, conditions and values questionable, and there is a high
probability of loss. An asset classified loss is considered uncollectible and
of such little value that continuance as an asset of the institution is not
warranted. Another category designated "special mention" also must be
established and maintained for assets which do not currently expose an insured
institution to a sufficient degree of risk to warrant classification as
substandard, doubtful or loss. At April 30, 1997, the Bank had an aggregate of
$30.2 million of classified assets, all of which were classified substandard.
In addition, at such date the Bank had $2.4 million of assets which were deemed
special mention.
ALLOWANCE FOR POSSIBLE LOAN LOSSES. The Bank's policy is to establish
reserves for estimated losses on delinquent loans when it determines that
losses are expected to be incurred on such loans. The allowance for losses on
loans is maintained at a level believed adequate by management to absorb
potential losses in the portfolio. Management's determination of the adequacy
of the allowance is based on an evaluation of the portfolio, past loss
experience, current economic conditions, volume, growth and composition of the
portfolio, and other relevant factors. The allowance is increased by
provisions for loan losses which are charged against income. As shown in the
table below, at April 30, 1997, the Bank's allowance for loan losses amounted
to $14.7 million or 60.2% and 1.5% of the Bank's non-performing loans and total
loans receivable, respectively. The Bank's provision to the allowance for
possible loan losses amounted to $4.7 million for the four months ended April
30, 1997 and $1.0 million during 1996. Such provisions during the 1997 period
and in 1996 were substantially higher than the Bank traditionally made in
earlier periods and were the result of, among other things, management's
continuing review of the risk elements in the Bank's loan portfolio. In
establishing provisions in the 1997 period and in 1996, management of the Bank
considered in particular the overall increase in the Bank's loan portfolio, the
potential increased risk of loss generally attributed to commercial real estate
loans, construction and land loans and commercial business loans as well as
management's continuing experience with the loan portfolio acquired from
Gateway (which constituted more than half of the Bank's total non-performing
assets at April 30, 1997), a longer than anticipated work-out period with
respect to such Gateway loans, and its consideration that, despite charge-offs
of $405,000 in the four months ended April 30, 1997 and $2.7 million in 1996,
the Bank's total non-performing loans have not been reduced but
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<PAGE> 120
have increased slightly since December 31, 1995. While no assurance can be
given that future charge-offs and/or additional provisions will not be
necessary, management of the Bank believes that, as of April 30, 1997, the
allowance for possible loan losses was adequate.
Effective December 21, 1993, the OTS, in conjunction with the Office
of the Comptroller of the Currency, the FDIC and the Federal Reserve Board,
issued a Policy Statement regarding an institution's allowance for loan and
lease losses. The Policy Statement, which reflects the position of the issuing
regulatory agencies and does not necessarily constitute GAAP, includes guidance
(i) on the responsibilities of management for the assessment and establishment
of an adequate allowance and (ii) for the agencies' examiners to use in
evaluating the adequacy of such allowance and the policies utilized to
determine such allowance. The Policy Statement also sets forth quantitative
measures for the allowance with respect to assets classified substandard and
doubtful and with respect to the remaining portion of an institution's loan
portfolio. Specifically, the Policy Statement sets forth the following
quantitative measures which examiners may use to determine the reasonableness
of an allowance: (i) 50% of the portfolio that is classified doubtful; (ii)
15% of the portfolio that is classified substandard; and (iii) for the portions
of the portfolio that have not been classified (including loans designated
special mention), estimated credit losses over the upcoming 12 months based on
facts and circumstances available on the evaluation date. While the Policy
Statement sets forth this quantitative measure, such guidance is not intended
as a "floor" or "ceiling." The Bank's policy for establishing loan losses is
not inconsistent with the Policy Statement.
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<PAGE> 121
The following table sets forth the activity in the Bank's allowance
for possible loan losses during the periods indicated.
<TABLE>
<CAPTION>
Four Months Ended
April 30, Year Ended December 31,
-------------------- ----------------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- -------- -------- --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Allowance at beginning of
period . . . . . . . . . . $9,977 $10,704 $10,704 $ 3,124 $ 3,180 $ 2,303 $ 950
----- ------ ------ ------ ------ ------- -----
Allowance from acquisition . -- -- -- 8,026 -- -- --
Provisions . . . . . . . . . 4,667 -- 1,000 -- 76 1,286 2,243
Charge-offs:
Mortgage loans:
Single-family
residential . . . . . . 175 30 1,590 606 107 463 443
Multi-family
residential . . . . . . -- -- -- -- 36 67 --
Commercial real estate. 116 10 376 -- -- -- --
Other loans . . . . . . . 114 30 729 176 275 386 698
---- --- ------ ----- ----- ----- ------
Total charge-offs . . . 405 70 2,695 782 418 916 1,141
Recoveries:
Mortgage loans:
Single-family
residential . . . . . . 164 156 408 198 166 335 79
Multi-family
residential . . . . . . -- -- -- -- 10 43 --
Commercial real estate. 194 360 413 19 -- -- --
Other loans . . . . . . . 90 31 147 119 110 129 172
------- ------- ------ ------- ------- ------ -------
Total recoveries . . . 448 547 968 336 286 507 251
------- ------- ------ ------- ------- ------ -------
Allowance at end of period . $14,687 $11,181 $9,977 $10,704 $ 3,124 $3,180 $ 2,303
====== ====== ===== ====== ====== ===== ======
Allowance for possible loan
losses to total
nonperforming loans
at end of period . . . . . . . 60.16% 40.84% 43.85% 44.20% 38.79% 41.21% 48.86%
===== ===== ===== ===== ===== ===== =====
Allowance for possible loan
losses to total
loans at end of period . . . . 1.48% 1.34% 1.02% 1.32% 0.51% 0.62% 0.50%
==== ==== ==== ==== ==== ==== ====
</TABLE>
82
<PAGE> 122
The following table sets forth information concerning the allocation
of the Bank's allowance for loan losses by loan category at the dates
indicated.
<TABLE>
<CAPTION>
December 31,
----------------------------------------------
April 30, 1997 1996 1995
----------------------- ---------------------- -----------------------
Percent Percent Percent
of of of
Loans in Loans in Loans in
Each Each Each
Category Category Category
to to to
Total Total Total
Amount Loans Amount Loans Amount Loans
---------- ----------- ---------- ----------- ---------- ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Residential . . . . $ 7,132 80.34% $3,192 77.20% $ 2,002 77.50%
Other . . . . . . . . 7,066 17.79 5,842 17.98 7,735 17.77
Other loans . . . . . . 489 3.82 943 6.55 967 6.84
---- ------ ----- ------ ----- ------
Total . . . . . . $14,687 101.94% $9,977 101.73% $10,704 102.11%
====== ====== ===== ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------------------
1994 1993 1992
----------------------- ---------------------- -----------------------
Percent Percent Percent
of of of
Loans in Loans in Loans in
Each Each Each
Category Category Category
to to to
Total Total Total
Amount Loans Amount Loans Amount Loans
---------- ----------- ---------- ----------- ---------- ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Residential . . . . $2,100 85.78% $2,031 86.25% $1,451 83.61%
Other . . . . . . . . -- 8.39 -- 8.00 -- 8.85
Other loans . . . . . . 1,024 6.99 1,149 6.84 852 8.51
----- ------ ----- ------ ----- ------
Total . . . . . . $3,124 101.16% $3,180 101.09% $2,303 100.98%
===== ====== ===== ====== ===== ======
</TABLE>
83
<PAGE> 123
The Bank will continue to monitor and modify its allowance for
possible loan losses as conditions dictate. While management believes that,
based on information currently available, the Bank's allowance for possible
loan losses is sufficient to cover losses inherent in its loan portfolio at
this time, no assurance will be given that the Bank's level of allowance for
loan losses will be sufficient to absorb future possible loan losses incurred
by the Bank or that future adjustments to the allowance for possible loan
losses will not be necessary if economic and other conditions differ
substantially from the economic and other conditions used by management to
determine the current level of the allowance for possible loan losses. In
addition, the OTS as an integral part of its examination process periodically
reviews the Bank's allowance for possible loan losses. Such agency may require
the Bank to make additional provisions for estimated possible loan losses based
upon judgments different from those of management.
SECURITIES ACTIVITIES
GENERAL. As of April 30, 1997, the Bank had an aggregate of $691.9
million of securities, or 37.4% of the Bank's total assets at such date. At
such date, the unrealized appreciation on the Bank's securities available for
sale amounted to $3.5 million, net of income taxes. The securities investment
policy of the Bank, which has been established by the Board of Trustees, is
designed, among other things, to assist the Bank in its asset/liability
management policies. The Bank's investment policy emphasizes principal
preservation, favorable returns on investment, maintaining liquidity within
designated guidelines, minimizing credit risk and maintaining flexibility.
Interest and dividend income from the Bank's securities portfolio generally
provides the second largest source of income to the Bank after interest on
loans. The Bank's current securities investment policy permits investments in
various types of liquid assets including obligations of the U.S. Treasury and
federal agencies, investment grade corporate obligations, various types of
mortgage-backed and mortgage-related securities, commercial paper, certificates
of deposit, and federal funds sold to financial institutions approved by the
Board of Trustees.
The Bank converted to a federally chartered mutual savings bank in
July 1997. Prior to that date, the Bank operated as a New York-chartered
mutual savings bank. While operating under its New York charter, the Bank was
permitted to make certain investments in equity securities and stock mutual
funds. At April 30, 1997, these equity investments totaled $52.8 million,
comprised primarily of a $23.0 million investment in a common stock mutual fund
designed specifically for New York State savings banks, a $14.4 million
investment divided among two additional mutual funds (which are designated as
trading account securities), $10.5 million of preferred stocks (generally
issued by U.S. Government agencies or government sponsored enterprises such as
the FNMA and FHLMC) and $4.9 million of various other equity securities.
Pursuant to current law, the Bank is required to divest or transfer such
securities except for preferred stock issued by U.S. Government agencies and
government sponsored enterprises. The Bank expects that it will either dispose
of such securities to a third-party or sell or transfer such securities to the
Company.
The Bank currently does not participate in hedging programs, interest
rate swaps, or other activities involving the use of off-balance sheet
derivative financial instruments. These
84
<PAGE> 124
activities require the prior approval of the Board of Trustees under the
Bank's securities investment policy. Similarly, the Bank has not and does not
invest in mortgage derivative securities which are deemed to be "high risk," or
purchase privately issued securities which are not rated investment grade. The
Bank tests its securities on at least a semi-annual basis to ensure that they
would not be considered "high risk" securities under Federal banking laws.
At April 30, 1997, $677.5 million of the Bank's securities were
classified as available for sale and $14.4 million were classified as trading
account. In December 1995, the Bank, pursuant to SFAS No. 115, reviewed its
securities portfolio and reclassified all of its securities then classified as
held to maturity as available for sale. Such classification as available for
sale provides the Bank with the flexibility to sell securities if deemed
appropriate in response to, among other factors, changes in interest rates.
Securities which are held to maturity are carried at cost, adjusted for the
amortization of premiums and the accretion of discounts using a method which
approximates a level yield. Securities classified as available for sale are
carried at fair value. Unrealized gains and losses on available for sale
securities are recognized as direct increases or decreases in equity, net of
applicable income taxes. See Notes 1 and 4 of the Notes to Consolidated
Financial Statements. Securities classified as trading account are carried at
market value with any increase or decrease in unrealized appreciation or
depreciation included in the Bank's income statement. In the four months ended
April 30, 1997 and the years ended December 31, 1996 and 1995, the Bank
recognized losses on securities transactions of $508,000, $2.7 million and
$305,000, respectively.
The Bank's investment policy provides management with the authority to
periodically sell securities provided, among other things, any losses on such
sales do not exceed $500,000, in which event prior approval of the Board of
Trustees is required. Generally, management will enter into such securities
sales only if it believes that it can replace the securities sold with newly
purchased securities that, due to their higher yield, will offset the losses
within a twelve month period. In addition, during the fourth quarter of each
of 1996 and 1995, management and the Board of Trustees reviewed the Bank's
entire securities portfolio and authorized extensive sales as part of its
securities restructuring efforts. In each case, the Bank substantially
replaced the securities sold with securities having a significantly higher
(over 75 basis points) projected yield without, in management's view,
sacrificing credit quality or liquidity. In addition, sales in the fourth
quarter of 1995 included certain lower grade ("A rated") corporate debt
securities. Subsequent to the Conversion, the Bank does not anticipate that it
will, as a matter of course, continue to authorize similar amounts of losses in
its securities activities.
85
<PAGE> 125
The following table sets forth the activity in the Bank's aggregate
securities portfolio during the periods indicated.
<TABLE>
<CAPTION>
Four Months Ended
April 30, Year Ended December 31,
----------------------- ----------------------------------------
1997 1996 1996 1995 1994
-------- -------- -------- -------- --------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Securities at beginning of period . . $703,134 $788,622 $788,622 $699,470 $773,636
Purchases:
U.S. government and agencies . . . 15,073 -- 29,670 215,948 998
State and municipals . . . . . . . -- -- -- 11,591 --
Agency mortgage-backed securities . 15,452 60,476 212,634 136,610 98,983
Agency CMOs . . . . . . . . . . . . 17,976 9,975 35,079 19,944 --
Private CMOs . . . . . . . . . . . -- 29,843 53,258 116 --
Other debt securities . . . . . . . -- -- -- 350 70,608
Marketable equity securities . . . 4,780 8,389 15,059 4,614 24,471
--------- --------- --------- --------- ---------
Total purchases . . . . . . . . . 53,281 108,683 345,700 389,173 195,060
Sales:
U.S. government and agencies . . . 9,956 9,500 71,051 5,000 6,084
State and municipals . . . . . . . 3,045 -- 70 12,132 113
Agency mortgage-backed securities . -- 8,115 113,617 -- --
Agency CMOs . . . . . . . . . . . . -- -- 16,332 -- --
Private CMOs . . . . . . . . . . . -- -- -- -- --
Other debt securities . . . . . . . -- 1,359 36,042 99,122 2,530
Marketable equity securities . . . 6,364 3,275 3,305 5,272 18,462
--------- --------- --------- --------- ---------
Total sales . . . . . . . . . . . 19,365 22,249 240,417 121,526 27,189
Repayments and prepayments:
U.S. government and agencies . . . 6,750 17,300 46,800 53,610 37,300
State and municipals . . . . . . . -- -- -- 100 --
Agency mortgage-backed securities . 31,411 34,724 102,748 54,430 68,208
Agency CMOs . . . . . . . . . . . . 1,712 1,028 4,399 3 --
Private CMOs . . . . . . . . . . . 3,667 926 3,466 24 --
Other debt securities . . . . . . . -- 26,340 31,767 86,470 112,325
Marketable equity securities . . . -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Total repayments and prepayments 43,540 80,318 189,180 194,637 217,833
Accretion of discount and amortization
of premium . . . . . . . . . . . . (93) (403) (692) (4,421) (7,306)
Unrealized gains or (losses) on
available-for-sale securities . . . (1,294) (10,779) (899) 20,563 (16,898)
Realized gains and losses on trading
assets . . . . . . . . . . . . . . (231) -- -- -- --
---------- ----------- ----------- ----------- -----------
Securities at end of period . . . . . $691,892 $783,556 $703,134 $788,622 $699,470
======= ======= ======= ======= =======
</TABLE>
86
<PAGE> 126
MORTGAGE-BACKED AND MORTGAGE-RELATED SECURITIES. At April 30, 1997,
the Bank's securities included $395.0 million, or 21.4% of total assets, of
mortgage participation certificates (which are also known as mortgage-backed
securities).
Mortgage-backed securities represent a participation interest in a
pool of single-family or multi-family mortgages. The principal and interest
payments on mortgage-backed securities are passed from the mortgage
originators, as servicer, through intermediaries (generally U.S. Government
agencies and government-sponsored enterprises) that pool and repackage the
participation interests in the form of securities, to investors such as the
Bank. Such U.S. Government agencies and government sponsored enterprises,
which guarantee the payment of principal and interest to investors, primarily
include the FHLMC, the FNMA and the Government National Mortgage Association
("GNMA").
The FHLMC is a private corporation chartered by the U.S. Government.
The FHLMC issues participation certificates backed principally by conventional
mortgage loans. The FHLMC guarantees the timely payment of interest and the
ultimate return of principal on participation certificates. The FNMA is a
private corporation chartered by the U.S. Congress with a mandate to establish
a secondary market for mortgage loans. The FNMA guarantees the timely payment
of principal and interest on FNMA securities. FHLMC and FNMA securities are
not backed by the full faith and credit of the United States, but because the
FHLMC and the FNMA are U.S. Government-sponsored enterprises, these securities
are considered to be among the highest quality investments with minimal credit
risks. The GNMA is a government agency within the Department of Housing and
Urban Development which is intended to help finance government-assisted housing
programs. GNMA securities are backed by FHA-insured and VA-guaranteed loans,
and the timely payment of principal and interest on GNMA securities are
guaranteed by the GNMA and backed by the full faith and credit of the U.S.
Government. Because the FHLMC, the FNMA and the GNMA were established to
provide support for low- and middle-income housing, there are limits to the
maximum size of loans that qualify for these programs.
Mortgage-backed securities typically are issued with stated principal
amounts, and the securities are backed by pools of mortgages that have loans
with interest rates that are within a range and have varying maturities. The
underlying pool of mortgages can be composed of either fixed-rate or
adjustable-rate loans. As a result, the risk characteristics of the underlying
pool of mortgages, (i.e., fixed-rate or adjustable-rate) as well as prepayment
risk, are passed on to the certificate holder. The life of a mortgage-backed
pass-through security thus approximates the life of the underlying mortgages.
The Bank's mortgage-backed securities portfolio includes investments in
mortgage-backed securities backed by ARMs or securities which otherwise have an
adjustable rate feature.
The Bank's securities also include $96.2 million in interests in
collateralized mortgage obligations ("CMOs") (which are also known as
mortgage-related securities). CMOs have been developed in response to investor
concerns regarding the uncertainty of cash flows associated with the prepayment
option of the underlying mortgagor and are typically issued by governmental
agencies, governmental sponsored enterprises and special purpose entities, such
as trusts, corporations or partnerships, established by financial institutions
or other
87
<PAGE> 127
similar institutions. A CMO can be collateralized by loans or securities which
are insured or guaranteed by the FNMA, the FHLMC or the GNMA. As of April 30,
1997, $50.2 million of the Bank's CMOs were insured or guaranteed by the GNMA,
FNMA or FHLMC and the remaining $45.9 million of the Bank's CMOs were rated
"AAA" by national rating agencies. In contrast to pass-through mortgage-backed
securities, in which cash flow is received pro rata by all security holders,
the cash flow from the mortgages underlying a CMO is segmented and paid in
accordance with a predetermined priority to investors holding various CMO
classes. By allocating the principal and interest cash flows from the
underlying collateral among the separate CMO classes, different classes of
bonds are created, each with its own stated maturity, estimated average life,
coupon rate and prepayment characteristics. The regular interests of some CMOs
are like traditional debt instruments because they have stated principal
amounts and traditionally defined interest rate terms. Purchasers of certain
other CMOs are entitled to the excess, if any, of the issuer's cash inflows,
including reinvestment earnings, over the cash outflows for debt service and
administrative expenses. These CMOs may include instruments designated as
residual interests, which represent an equity ownership interest in the
underlying collateral, subject to the first lien of the investors in the other
classes of the CMO. Certain residual CMO interests may be riskier than many
regular CMO interests to the extent that they could result in the loss of a
portion of the original investment. Moreover, cash flows from residual
interests are very sensitive to prepayments and, thus, contain a high degree of
interest rate risk. As of April 30, 1997, the Bank's CMOs did not include any
residual interests or interest-only or principal-only securities. As a matter
of policy, the Bank does not invest in residual interests of CMOs or
interest-only and principal-only securities.
Mortgage-backed and mortgage-related securities generally yield less
than the loans which underlie such securities because of their payment
guarantees or credit enhancements which offer nominal credit risk. In
addition, mortgage-backed and related securities are more liquid than
individual mortgage loans and may be used to collateralize borrowings of the
Bank. Mortgage-backed securities issued or guaranteed by the FNMA or the FHLMC
(except interest-only securities or the residual interests in CMOs) are
weighted at no more than 20.0% for risk-based capital purposes, compared to a
weight of 50.0% to 100.0% for residential loans.
The Bank generally does not invest in mortgage-backed and
mortgage-related securities with estimated average lives exceeding 10 years.
At April 30, 1997, the estimated weighted average life of the Bank's
mortgage-backed and mortgage-related securities was approximately 3.6 years.
The actual maturity of a mortgage-backed or mortgage-related security may be
less than its stated maturity due to prepayments of the underlying mortgages.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations - Asset and Liability Management." Prepayments that are faster than
anticipated may shorten the life of the security and adversely affect its yield
to maturity. The yield is based upon the interest income and the amortization
of any premium or discount related to the mortgage-backed security. In
accordance with GAAP, premiums are amortized and discounts are accreted over
the estimated lives of the loans, which decrease and increase interest income,
respectively. The prepayment assumptions used to determine the amortization
period for premiums and discounts can significantly affect the yield of the
88
<PAGE> 128
mortgage-backed or mortgage-related security, and these assumptions are
reviewed periodically to reflect actual prepayments. Although prepayments of
underlying mortgages depend on many factors, including the type of mortgages,
the coupon rate, the age of mortgages, the geographical location of the
underlying real estate collateralizing the mortgages and general levels of
market interest rates, the difference between the interest rates on the
underlying mortgages and the prevailing mortgage interest rates generally is
the most significant determinant of the rate of prepayments.
During periods of rising mortgage interest rates, if the coupon rates
of the underlying mortgages are less than the prevailing market interest rates
offered for mortgage loans, refinancings generally decrease and slow the
prepayment of the underlying mortgages and the related securities. Conversely,
during periods of falling mortgage interest rates, if the coupon rates of the
underlying mortgages exceed the prevailing market interest rates offered for
mortgage loans, refinancing generally increases and accelerates the prepayment
of the underlying mortgages and the related securities. Under such
circumstances, the Bank may be subject to reinvestment risk because to the
extent that the Bank's mortgage-backed and mortgage-related securities amortize
or prepay faster than anticipated, the Bank may not be able to reinvest the
proceeds of such repayments and prepayments at a comparable rate. At April 30,
1997, of the $489.4 million of mortgage-backed and mortgage-related securities,
an aggregate of $244.6 million were secured by fixed-rate securities and an
aggregate of $244.8 million were secured by adjustable-rate securities.
OTHER SECURITIES. Other than mortgage-backed and mortgage-related
securities, the Bank's securities consist primarily of U.S. Treasury and
Federal agency obligations, which amounted to $140.1 million at April 30, 1997,
marketable equity securities, which amounted to $41.8 million at April 30,
1997, and trading account securities, which amounted to $14.4 million at April
30, 1997. The Bank currently is in the process of liquidating its trading
account securities. In addition, as previously discussed, the Bank intends to
sell or transfer its marketable equity securities with the exception of agency
issued preferred stocks. As with its mortgage-backed and mortgage-related
securities, the Bank attempts to maintain a high degree of liquidity in its
other securities and generally does not invest in debt securities with terms to
maturity in excess of 10 years. As of April 30, 1997, the estimated term to
maturity of the Bank's other securities was 3.3 years.
The following table sets forth certain information regarding the
maturities of the Bank's other securities (all of which were classified as
available for sale) at April 30, 1997.
<TABLE>
<CAPTION>
Contractually Maturing
------------------------------------------------------------------------------------------
Weighted Weighted Weighted Weighted
Under 1 Average 1-5 Average 6-10 Average Over 10 Average
Year Yield Years Yield Years Yield Years Yield
---------- ---------- --------- ----------- ------- ----------- --------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and
federal agency obligations. $29,399 6.33% $69,898 6.51% $40,832 6.92% $ -- --%
Other . . . . . . . . . . . . 1,010 5.77 100 8.13 -- -- -- --
------- ------- ------- ------
$30,409 $69,998 $40,832 $ --
====== ====== ====== =====
</TABLE>
89
<PAGE> 129
SOURCES OF FUNDS.
GENERAL. Deposits are the primary source of the Bank's funds for
lending and other investment purposes. In addition to deposits, the Bank
derives funds from loan principal repayments and prepayments and borrowings.
Loan repayments are a relatively stable source of funds, while deposit inflows
and outflows are significantly influenced by general interest rates and money
market conditions. Borrowings may be used on a short-term basis to compensate
for reductions in the availability of funds from other sources. They may also
be used on a longer term basis for general business purposes.
DEPOSITS. The Bank's deposit products include a broad selection of
deposit instruments, including negotiable order of withdrawal ("NOW") accounts,
money market accounts, non-interest bearing checking accounts, regular savings
accounts and term certificate accounts. Deposit account terms vary, with the
principal differences being the minimum balance required, the time periods the
funds must remain on deposit and the interest rate.
The Bank utilizes traditional marketing methods to attract new
customers and savings deposits. The Bank does not advertise for deposits
outside of its market area and management believes that an insignificant number
of deposit accounts were held by non-residents of New York at April 30, 1997.
The Bank does not utilize the services of deposit brokers. The Bank
traditionally has relied on customer service and convenience in marketing its
deposit products, and the Bank generally has not sought to be a price leader on
its deposits. The Bank is the largest depository institution, by deposit
market share, in Staten Island and the Bank's acquisition of Gateway, which had
$276.6 million in deposits at the time of acquisition, added to the Bank's
deposit base. Despite its strong market presence, during each of 1996, 1995
(excluding the effect of the Gateway acquisition) and 1994 the Bank experienced
disintermediation of deposits. Management attributes such disintermediation in
large part to certain higher rate competing investment products being offered
by non-depository institutions. During the four months ended April 30, 1997,
the Bank reversed the outflow of deposits and reported a net increase in
deposits before interest credited of $14.4 million. Such increase during the
1997 period is, in management's view, primarily the result of the Bank's
business development efforts. Commencing in April 1996, the Bank's business
development officers have actively solicited, through individual meetings and
other contacts, increased deposits particularly commercial transaction
accounts, with businesses and individuals in the Bank's Staten Island and
Brooklyn, New York, market areas. In addition, in recent periods, the Bank's
lending officers and branch managers have increased their efforts to solicit
new deposits from the Bank's loan customers and other residents in its market
area.
90
<PAGE> 130
The following table sets forth the activity in the Bank's deposits
during the periods indicated. Year Ended December 31,
<TABLE>
<CAPTION>
Four Months Year Ended December 31,
Ended ----------------------------------------------
April 30, 1997 1996 1995 1994
------------------ ---------- ---------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Beginning balance . . . . . . . . $1,577,748 $1,535,617 $1,225,918 $1,223,708
Net increase (decrease) before
interest (credited) . . . . . . 14,426 (8,397) 265,485(1) (34,298)
Interest credited . . . . . . . . 14,619 50,528 44,214 36,508
Net increase in deposits . . . . 29,045 42,131 309,699 2,210
----------- ---------- ---------- ----------
Ending balance . . . . . . . . . $1,606,793 $1,577,748 $1,535,617 $1,225,918
========= ========= ========= =========
</TABLE>
- ---------------
(1) Includes $276.6 million of deposits acquired from Gateway.
The following table sets forth by various interest rate categories the
certificates of deposit with the Bank at the dates indicated.
<TABLE>
<CAPTION> December 31,
April 30, ---------------------------------------------
1997 1996 1995 1994
--------------- ---------- ---------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
0.00% to 2.99% . . . . . . . . . . . $ -- $ -- $ -- $ 13,573
3.00% to 3.99% . . . . . . . . . . . 11,082 12,314 20,138 90,046
4.00% to 4.99% . . . . . . . . . . . 177,868 223,234 103,882 83,239
5.00% to 6.99% . . . . . . . . . . . 336,505 262,924 334,922 93,136
7.00% to 8.99% . . . . . . . . . . . 2,133 2,098 8,420 6,216
9.00% to 10.99% . . . . . . . . . . . -- -- -- --
11.00% and over . . . . . . . . . . . -- -- -- --
----------- --------- --------- ----------
Total . . . . . . . . . . . . . . $527,588 $500,570 $467,362 $286,210
======= ======= ======= =======
</TABLE>
91
<PAGE> 131
The following table sets forth the amount and remaining maturities of
the Bank's certificates of deposit at April 30, 1997.
<TABLE>
<CAPTION>
Over Six Months Over One Year Over Two Years
Six Months Through One Through Two Through Three Over Three
and Less Year Years Years Years
-------------- ------------------- -------------- ---------------- --------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
0.00% to 1.99% . . . . . $ -- $ -- $ -- $ -- $ --
2.00% to 2.99% . . . . . -- -- -- -- --
3.00% to 3.99% . . . . . 9,995 1,087 -- -- --
4.00% to 4.99% . . . . . 138,768 5,549 32,669 882 --
5.00% to 6.99% . . . . . 122,670 109,545 67,877 17,054 19,359
7.00% to 8.99% . . . . . -- -- -- 1,998 135
9.00% to 10.99% . . . . -- -- -- -- --
11.00% & over . . . . . . -- -- -- -- --
----------- ---------- ---------- ---------- ----------
Total . . . . . . . . $271,433 $116,181 $100,546 $19,934 $19,494
======= ======= ======= ====== ======
</TABLE>
As of April 30, 1997, the aggregate amount of outstanding time
certificates of deposit in amounts greater than or equal to $100,000, was
approximately $108.1 million. The following table presents the maturity of
these time certificates of deposit at such dates.
<TABLE>
<CAPTION>
April 30, 1997
---------------
(In Thousands)
<S> <C>
3 months or less . . . . . . . . . . . . . . . . . . . . $ 45,947
Over 3 months through 6 months . . . . . . . . . . . . . 25,260
Over 6 months through 12 months . . . . . . . . . . . . . 12,812
Over 12 months . . . . . . . . . . . . . . . . . . . . . 24,055
--------
$108,074
=======
</TABLE>
The following table sets forth the dollar amount of deposits in
various types of deposits offered by the Bank at the dates indicated.
<TABLE>
<CAPTION>
April 30, December 31,
------------------------ ----------------------------------------------------------------------
1997 1996 1995 1994
------------------------ --------------------- --------------------- ----------------------
Amount Percentage Amount Percentage Amount Percentage Amount Percentage
----------- ----------- ---------- ---------- --------- ---------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Savings accounts . . . $822,431 51.2% $832,584 52.77% $739,697 48.17% $793,753 64.74%
Certificates of deposit 527,588 32.8 500,570 31.73 467,362 30.43 286,210 23.35
Money market accounts . 81,924 5.1 79,704 5.05 83,343 5.43 58,086 4.74
NOW accounts . . . . . 16,708 1.0 14,298 0.91 55,124 3.59 24,878 2.03
Demand deposits . . . . 158,142 9.8 150,592 9.54 190,091 12.38 62,991 5.14
---------- ----- ---------- ------ ---------- ------ ---------- ------
Total . . . . . . . $1,606,793 100.0% $1,577,748 100.00% $1,535,617 100.00% $1,225,918 100.00%
========= ===== ========= ====== ========= ====== ========= ======
</TABLE>
BORROWINGS. Traditionally, the Bank made very limited use of
borrowings. During 1997, the Bank determined to increase its use of leverage
through increased utilization of borrowings. At April 30, 1997, the Bank had
$30.0 million of borrowed funds, substantially all of which consisted of
reverse repurchase agreements with established brokerage firms.
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Reverse repurchase agreements represent agreements to sell securities under
terms which require the Bank to repurchase the same or substantially similar
securities by a specified date (generally less than one year). In addition, in
August 1997, the Bank became eligible to obtain advances from the Federal Home
Loan Bank ("FHLB") of New York upon the security of the common stock it owns in
that bank and certain of its residential mortgage loans, provided certain
standards related to creditworthiness have been met. Such advances are
available pursuant to several credit programs, each of which has its own
interest rate and range of maturities. The Bank intends to continue to utilize
borrowings as a source of funds subsequent to the Conversion.
TRUST ACTIVITIES
Staten Island Savings also provides a full range of trust and
investment services, and acts as executor or administrator of estates and as
trustee for various types of trusts. Trust and investment services are
offered through the Bank's Trust Department which was acquired as part of the
Gateway acquisition. Fiduciary and investment services are provided primarily
to persons and entities located in Staten Island, New York. Services offered
include fiduciary services for trusts and estates, money management, custodial
services and pension and employee benefits consulting. As of April 30, 1997,
the Trust Department maintained approximately 179 trust/fiduciary accounts,
with an aggregate principal balance of $77.0 million at such date. Revenues
from the Trust Department amounted to $85,000 in the four months ended April
30, 1997, and $258,000 and $280,000 in 1996 and 1995, respectively.
Historically, the operation of the Trust Department has not been profitable.
The accounts maintained by the Trust/Investment Services Division
consist of "managed" and "non-managed" accounts. "Managed accounts" are those
accounts under custody for which the Bank has responsibility for administration
and investment management and/or investment advice. "Non-managed" accounts are
those accounts for which the Bank merely acts as a custodian. The Company
receives fees dependent upon the level and type of service provided. The Trust
Department administers various trust accounts (revocable, irrevocable and
charitable trusts, and trusts under wills), agency accounts (various investment
fund products), estate accounts, and employee benefit plan accounts (assorted
plans and IRA accounts). Two trust officers and related staff are assigned to
the Trust Department. The administration of trust and fiduciary accounts are
monitored by the Trust Committee of the Board of Trustees of States Island
Savings.
SAVINGS BANK LIFE INSURANCE
The Bank has a Savings Bank Life Insurance ("SBLI") department which
issues life insurance to individuals. The SBLI Department's activities are
segregated from the Bank and, while they do not directly affect the Bank's
earnings, management believes that offering SBLI is beneficial to the Bank's
relationship with its depositors and the general public. The SBLI Department
pays its own expenses and reimburses the Bank for expenses incurred on its
behalf. At April 30, 1997, the SBLI Department had policies totaling $1.7
billion millon in force.
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SUBSIDIARIES
The Bank currently has one inactive subsidiary which is in the process
of dissolution.
LEGAL PROCEEDINGS
The Bank is involved in routine legal proceedings occurring in the
ordinary course of business which, in the aggregate, are believed by management
to be immaterial to the financial condition of the Bank.
EMPLOYEES
The Bank had 500 full-time employees and 107 part-time employees at
April 30, 1997. None of these employees is represented by a collective
bargaining agent, and the Bank believes that it enjoys good relations with its
personnel.
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<PAGE> 134
OFFICE AND PROPERTIES
At April 30, 1997, the Bank conducted its business from its executive
and administrative offices in Staten Island, New York, and 16 full service
branch offices in Staten Island, one full service branch office in Brooklyn as
well as three limited service branch offices, a loan origination center and its
Trust Department in Staten Island. In addition, the Bank maintains 36
automated teller machines ("ATMs"), with at least two ATMs at each of the
Bank's branch offices, and an office for its SBLI activities.
The following table sets forth certain information relating to the
Bank's offices at April 30, 1997.
<TABLE>
<CAPTION>
Net Book Value of
Property and
Lease Leasehold
Owned or Expiration Improvements at Deposits at
Location(1) Leased Date April 30, 1997 April 30, 1997
- ---------------------------------- ----------- -------------- ------------------- ------------------
(In Thousands)
<S> <C> <C> <C>
EXECUTIVE OFFICE:
15 Beach Street Owned $1,659 $ --
Staten Island, NY 10304
BRANCH OFFICES:
81-91 Water Street Owned 215 127,087
Staten Island, NY 10304
15 Hyatt Street Owned 43 63,403
Staten Island, NY 10301
257 New Dorp Lane Owned 26 135,242
Staten Island, NY 10305
260 New Dorp Lane Owned 516 --(1)
Staten Island, NY 10305
1837 Victory Boulevard Owned 231 155,957
Staten Island, NY 10314
1850 Victory Boulevard Owned 171 --(2)
Staten Island, NY 10314
1320 Hylan Boulevard Owned 594 156,409
Staten Island, NY 10305
461-465, 475 Forest Avenue Owned 1,209 109,701
Staten Island, NY 10310
3150 Amboy Road Owned $ 446 $ 99,273
Staten Island, NY 10308
</TABLE>
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<PAGE> 135
<TABLE>
<CAPTION>
Net Book Value of
Property and
Lease Leasehold
Owned or Expiration Improvements at Deposits at
Location(1) Leased Date April 30, 1997 April 30, 1997
- ---------------------------------- ----------- -------------- ------------------- ------------------
(In Thousands)
<S> <C> <C> <C> <C>
900 Huguenot Avenue Leased 2000 (3) 385 66,743
Staten Island, NY 10312
5840 Amboy Road Owned 924 --(4)
Staten Island, NY 10309
2700 Hylan Boulevard Leased 2005 (3) 425 118,522
Staten Island, NY 10306
4025 Amboy Road Owned 323 100,121
Staten Island, NY 10308
6975 Amboy Road Owned 1,446 58,889
Staten Island, NY 10309
1630 Forest Avenue Owned 770 76,479
Staten Island, NY 10302
43 Richmond Hill Road Leased 1999 (3) 543 64,056
Staten Island, NY 10314
800 Forest Avenue Owned 826 53,848
Staten Island, NY 10310
1630 Richmond Road Owned 1,091 137,240
Staten Island, NY 10304
4310-4312-4320 Amboy Road Leased 1998 (3) 110 47,630
Staten Island, NY 10312
9512-20 3rd Avenue Leased 1999 (3) 331 43,133
Brooklyn, NY 11209
OTHER OFFICES:
45 Beach Street Owned 455 --(5)
Staten Island, NY 10304
260 Christopher Lane Leased 2003 (3) 252 --(6)
Staten Island, NY 10314
96 Prospect Street Owned 330 --(5)
Staten Island, NY 10304
1591 Richmond Road Owned $ 651 $ --(7)
Staten Island, NY 10304
</TABLE>
96
<PAGE> 136
<TABLE>
<CAPTION>
Net Book Value of
Property and
Lease Leasehold
Owned or Expiration Improvements at Deposits at
Location(1) Leased Date April 30, 1997 April 30, 1997
- ---------------------------------- ----------- -------------- ------------------- ------------------
(In Thousands)
<S> <C> <C> <C> <C>
176 Broadway Leased 2000 -- --(8)
New York, NY 10038
</TABLE>
- ---------------
(1) Consists of two ATMs and a manned drive-in facility.
(2) Consists of three ATMs and a manned drive-in facility.
(3) Excludes options to extend term.
(4) An automated drive through facility with two ATMs.
(5) Administrative office.
(6) Loan origination center.
(7) Trust Department office.
(8) SBLI Department.
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<PAGE> 137
REGULATION
GENERAL
The Bank is a federally chartered and insured savings bank subject to
extensive regulation and supervision by the OTS, as the primary federal
regulator of savings associations, and the FDIC, as the administrator of the
BIF.
The federal banking laws contain numerous provisions affecting various
aspects of the business and operations of savings associations and savings and
loan holding companies. The following description of statutory and regulatory
provisions and proposals, which is not intended to be a complete description of
these provisions or their effects on the Company or the Bank, is qualified in
its entirety by reference to the particular statutory or regulatory provisions
or proposals.
REGULATION OF SAVINGS AND LOAN HOLDING COMPANIES
Holding Company Acquisitions. The Company, as a savings and loan
holding company within the meaning of the Home Owners' Loan Act, as amended
("HOLA"), will be required to register with the OTS. The HOLA and OTS
regulations generally prohibit a savings and loan holding company, without
prior OTS approval, from acquiring, directly or indirectly, the ownership or
control of any other savings association or savings and loan holding company,
or all, or substantially all, of the assets or more than 5% of the voting
shares thereof. These provisions also prohibit, among other things, any
director or officer of a savings and loan holding company, or any individual
who owns or controls more than 25% of the voting shares of such holding
company, from acquiring control of any savings association not a subsidiary of
such savings and loan holding company, unless the acquisition is approved by
the OTS.
Holding Company Activities. The Company will operate as a unitary
savings and loan holding company. Generally, there are limited restrictions on
the activities of a unitary savings and loan holding company and its
non-savings association subsidiaries. If the Company ceases to be a unitary
savings and loan holding company, the activities of the Company and its
non-savings association subsidiaries would thereafter be subject to substantial
restrictions.
The HOLA requires every savings association subsidiary of a savings
and loan holding company to give the OTS at least 30 days' advance notice of
any proposed dividends to be made on its guarantee, permanent or other
non-withdrawable stock, or else such dividend will be invalid. See
"--Regulation of Federal Savings Banks--Capital Distribution Regulation."
Affiliate Restrictions. Transactions between a savings association
and its "affiliates" are subject to quantitative and qualitative restrictions
under Sections 23A and 23B of the Federal Reserve Act. Affiliates of a savings
association include, among other entities, the savings association's holding
company and companies that are under common control with the savings
association.
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<PAGE> 138
In general, Sections 23A and 23B and OTS regulations issued in
connection therewith limit the extent to which a savings association or its
subsidiaries may engage in certain "covered transactions" with affiliates to an
amount equal to 10% of the association's capital and surplus, in the case of
covered transactions with any one affiliate, and to an amount equal to 20% of
such capital and surplus, in the case of covered transactions with all
affiliates. In addition, a savings association and its subsidiaries may engage
in covered transactions and certain other transactions only on terms and under
circumstances that are substantially the same, or at least as favorable to the
savings association or its subsidiary, as those prevailing at the time for
comparable transactions with nonaffiliated companies. A "covered transaction"
is defined to include a loan or extension of credit to an affiliate; a purchase
of investment securities issued by an affiliate; a purchase of assets from an
affiliate, with certain exceptions; the acceptance of securities issued by an
affiliate as collateral for a loan or extension of credit to any party; or the
issuance of a guarantee, acceptance or letter of credit on behalf of an
affiliate.
In addition, under the OTS regulations, a savings association may not
make a loan or extension of credit to an affiliate unless the affiliate is
engaged only in activities permissible for bank holding companies; a savings
association may not purchase or invest in securities of an affiliate other than
shares of a subsidiary; a savings association and its subsidiaries may not
purchase a low-quality asset from an affiliate; and covered transactions and
certain other transactions between a savings association or its subsidiaries
and an affiliate must be on terms and conditions that are consistent with safe
and sound banking practices. With certain exceptions, each loan or extension of
credit by a savings association to an affiliate must be secured by collateral
with a market value ranging from 100% to 130% (depending on the type of
collateral) of the amount of the loan or extension of credit.
The OTS regulation generally excludes all non-bank and non-savings
association subsidiaries of savings associations from treatment as affiliates,
except to the extent that the OTS or the Federal Reserve Board decides to treat
such subsidiaries as affiliates. The regulation also requires savings
associations to make and retain records that reflect affiliate transactions in
reasonable detail, and provides that certain classes of savings associations
may be required to give the OTS prior notice of affiliate transactions.
REGULATION OF FEDERAL SAVINGS BANKS
Regulatory System. As part of the Conversion, the Bank will convert
from a federally chartered mutual savings bank to a federally chartered stock
savings bank. As a federally insured savings bank, lending activities and
other investments of the Bank must comply with various statutory and regulatory
requirements. The Bank is regularly examined by the OTS and must file periodic
reports concerning its activities and financial condition.
Although the OTS is the Bank's primary regulator, the FDIC has "backup
enforcement authority" over the Bank. The Bank's eligible deposit accounts are
insured by the FDIC under the BIF, up to applicable limits.
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<PAGE> 139
Federal Home Loan Banks. The Bank is a member of the FHLB System.
Among other benefits, FHLB membership provides the Bank with a central credit
facility. The Bank is required to own capital stock in an FHLB in an amount
equal to the greater of: (i) 1% of its aggregate outstanding principal amount
of its residential mortgage loans, home purchase contracts and similar
obligations at the beginning of each calendar year, (ii) .3% of total assets,
or (iii) 5% of its FHLB advances (borrowings).
Liquid Assets. Under OTS regulations, for each calendar month, a
savings bank is required to maintain an average daily balance of liquid assets
(including cash, certain time deposits and savings accounts, bankers'
acceptances, certain government obligations and certain other investments) not
less than a specified percentage of the average daily balance of its net
withdrawable accounts plus short-term borrowings (its liquidity base) during
the preceding calendar month. This liquidity requirement, which is currently at
5.0%, may be changed from time to time by the OTS to any amount between 4.0% to
10.0%, depending upon certain factors. OTS regulations also require each
savings association to maintain an average daily balance of short-term liquid
assets equal to not less than 1.0% of the average daily balance of its net
withdrawable accounts and short-term borrowings during the preceding calendar
month. The Bank maintains liquid assets in compliance with these regulations.
Regulatory Capital Requirements. OTS capital regulations require
savings banks to satisfy minimum capital standards: risk-based capital
requirements, a leverage requirement and a tangible capital requirement.
Savings banks must meet each of these standards in order to be deemed in
compliance with OTS capital requirements. In addition, the OTS may require a
savings association to maintain capital above the minimum capital levels.
All savings banks are required to meet a minimum risk-based capital
requirement of total capital (core capital plus supplementary capital) equal to
8% of risk-weighted assets (which includes the credit risk equivalents of
certain off-balance sheet items). In calculating total capital for purposes of
the risk-based requirement, supplementary capital may not exceed 100% of core
capital. Under the leverage requirement, a savings bank is required to maintain
core capital equal to a minimum of 3% of adjusted total assets. (In addition,
under the prompt corrective action provisions of the OTS regulations, all but
the most highly-rated institutions must maintain a minimum leverage ratio of 4%
in order to be adequately capitalized. See "--Prompt Corrective Action.") A
savings bank is also required to maintain tangible capital in an amount at
least equal to 1.5% of its adjusted total assets.
Under OTS regulations, a savings bank with a greater than "normal"
level of interest rate exposure must deduct an interest rate risk ("IRR")
component in calculating its total capital for purposes of determining whether
it meets its risk-based capital requirement. Interest rate exposure is
measured, generally, as the decline in an institution's net portfolio value
that would result from a 200 basis point increase or decrease in market
interest rates (whichever would result in lower net portfolio value), divided
by the estimated economic value of the savings association's assets. The
interest rate risk component to be deducted from total capital is equal to
one-half of the difference between an institution's measured exposure and
"normal" IRR exposure (which is
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<PAGE> 140
defined as 2%), multiplied by the estimated economic value of the institution's
assets. In August 1995, the OTS indefinitely delayed implementation of its IRR
regulation. Based on internal measures of interest rate risk at April 30,
1997, the Bank would have been required to deduct $4.7 million pursuant to the
IRR component in calculating total risk-based capital had the IRR component of
the capital regulations been in effect. However, even in the event of such a
deduction, the Bank would still be deemed to be a "well-capitalized"
institution.
These capital requirements are viewed as minimum standards by the OTS,
and most institutions are expected to maintain capital levels well above the
minimum. In addition, the OTS regulations provide that minimum capital levels
higher than those provided in the regulations may be established by the OTS for
individual savings associations, upon a determination that the savings
association's capital is or may become inadequate in view of its circumstances.
The OTS regulations provide that higher individual minimum regulatory capital
requirements may be appropriate in circumstances where, among others: (1) a
savings association has a high degree of exposure to interest rate risk,
prepayment risk, credit risk, concentration of credit risk, certain risks
arising from nontraditional activities, or similar risks or a high proportion
of off-balance sheet risk; (2) a savings association is growing, either
internally or through acquisitions, at such a rate that supervisory problems
are presented that are not dealt with adequately by OTS regulations; and (3) a
savings association may be adversely affected by activities or condition of its
holding company, affiliates, subsidiaries or other persons or savings
associations with which it has significant business relationships. The Bank is
not subject to any such individual minimum regulatory capital requirement.
The Bank's tangible capital ratio was 8.44%, its core capital ratio
was 9.53% and its total risk-based capital ratio was 19.59% at April 30, 1997.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Capital Resources."
Certain Consequences of Failure to Comply with Regulatory Capital
Requirements. A savings bank's failure to maintain capital at or above the
minimum capital requirements may be deemed an unsafe and unsound practice and
may subject the savings bank to enforcement actions and other proceedings. Any
savings bank not in compliance with all of its capital requirements is required
to submit a capital plan that addresses the bank's need for additional capital
and meets certain additional requirements. While the capital plan is being
reviewed by the OTS, the savings bank must certify, among other things, that it
will not, without the approval of its appropriate OTS Regional Director, grow
beyond net interest credited or make capital distributions. If a savings bank's
capital plan is not approved, the bank will become subject to additional growth
and other restrictions. In addition, the OTS, through a capital directive or
otherwise, may restrict the ability of a savings bank not in compliance with
the capital requirements to pay dividends and compensation, and may require
such a bank to take one or more of certain corrective actions, including,
without limitation: (i) increasing its capital to specified levels, (ii)
reducing the rate of interest that may be paid on savings accounts, (iii)
limiting receipt of deposits to those made to existing accounts, (iv) ceasing
issuance of new accounts of any or all classes or categories except in exchange
for existing accounts, (v) ceasing or limiting the purchase of loans or the
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<PAGE> 141
making of other specified investments, and (vi) limiting operational
expenditures to specified levels.
The HOLA permits savings banks not in compliance with the OTS capital
standards to seek an exemption from certain penalties or sanctions for
noncompliance. Such an exemption will be granted only if certain strict
requirements are met, and must be denied under certain circumstances. If an
exemption is granted by the OTS, the savings bank still may be subject to
enforcement actions for other violations of law or unsafe or unsound practices
or conditions.
Prompt Corrective Action. The prompt corrective action regulation of
the OTS, promulgated under FDICIA, requires certain mandatory actions and
authorizes certain other discretionary actions to be taken by the OTS against a
savings bank that falls within certain undercapitalized capital categories
specified in the regulation.
The regulation establishes five categories of capital classification:
"well capitalized," "adequately capitalized," "undercapitalized,"
"significantly undercapitalized," and "critically undercapitalized." Under the
regulation, the ratio of total capital to risk-weighted assets, core capital to
risk-weighted assets and the leverage ratio are used to determine an
institution's capital classification. The Bank meets the capital requirements
of a "well capitalized" institution under applicable OTS regulations.
In general, the prompt corrective action regulation prohibits an
insured depository institution from declaring any dividends, making any other
capital distribution, or paying a management fee to a controlling person if,
following the distribution or payment, the institution would be within any of
the three undercapitalized categories. In addition, adequately capitalized
institutions may accept brokered deposits only with a waiver from the FDIC and
are subject to restrictions on the interest rates that can be paid on such
deposits. Undercapitalized institutions may not accept, renew or roll-over
brokered deposits.
Institutions that are classified as undercapitalized are subject to
certain mandatory supervisory actions, including: (i) increased monitoring by
the appropriate federal banking agency for the institution and periodic review
of the institution's efforts to restore its capital, (ii) a requirement that
the institution submit a capital restoration plan acceptable to the appropriate
federal banking agency and implement that plan, and that each company having
control of the institution guarantee compliance with the capital restoration
plan in an amount not exceeding the lesser of 5% of the institution's total
assets at the time it received notice of being undercapitalized, or the amount
necessary to bring the institution into compliance with applicable capital
standards at the time it fails to comply with the plan, and (iii) a limitation
on the institution's ability to make any acquisition, open any new branch
offices, or engage in any new line of business without the prior approval of
the appropriate federal banking agency for the institution or the FDIC.
The regulation also provides that the OTS may take any of certain
additional supervisory actions against an undercapitalized institution if the
agency determines that such actions are
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necessary to resolve the problems of the institution at the least possible
long-term cost to the deposit insurance fund. These supervisory actions
include: (i) requiring the institution to raise additional capital or be
acquired by another institution or holding company if certain grounds exist,
(ii) restricting transactions between the institution and its affiliates, (iii)
restricting interest rates paid by the institution on deposits, (iv)
restricting the institution's asset growth or requiring the institution to
reduce its assets, (v) requiring replacement of senior executive officers and
directors, (vi) requiring the institution to alter or terminate any activity
deemed to pose excessive risk to the institution, (vii) prohibiting capital
distributions by bank holding companies without prior approval by the FRB,
(viii) requiring the institution to divest certain subsidiaries, or requiring
the institution's holding company to divest the institution or certain
affiliates of the institution, and (ix) taking any other supervisory action
that the agency believes would better carry out the purposes of the prompt
corrective action provisions of FDICIA.
Institutions classified as undercapitalized that fail to submit a
timely, acceptable capital restoration plan or fail to implement such a plan
are subject to the same supervisory actions as significantly undercapitalized
institutions. Significantly undercapitalized institutions are subject to the
mandatory provisions applicable to undercapitalized institutions. The
regulation also makes mandatory for significantly undercapitalized institutions
certain of the supervisory actions that are discretionary for institutions
classified as undercapitalized, creates a presumption in favor of certain
discretionary supervisory actions, and subjects significantly undercapitalized
institutions to additional restrictions, including a prohibition on paying
bonuses or raises to senior executive officers without the prior written
approval of the appropriate federal bank regulatory agency. In addition,
significantly undercapitalized institutions may be subjected to certain of the
restrictions applicable to critically undercapitalized institutions.
The regulation requires that an institution be placed into
conservatorship or receivership within 90 days after it becomes critically
undercapitalized, unless the OTS, with concurrence of the FDIC, determines that
other action would better achieve the purposes of the prompt corrective action
provisions of FDICIA. Any such determination must be renewed every 90 days. A
depository institution also must be placed into receivership if the institution
continues to be critically undercapitalized on average during the fourth
quarter after the institution initially became critically undercapitalized,
unless the institution's federal bank regulatory agency, with concurrence of
the FDIC, makes certain positive determinations with respect to the
institution.
Critically undercapitalized institutions are also subject to the
restrictions generally applicable to significantly undercapitalized
institutions and to a number of other severe restrictions. For example,
beginning 60 days after becoming critically undercapitalized, such institutions
may not pay principal or interest on subordinated debt without the prior
approval of the FDIC. (However, the regulation does not prevent unpaid
interest from accruing on subordinated debt under the terms of the debt
instrument, to the extent otherwise permitted by law.) In addition, critically
undercapitalized institutions may be prohibited from engaging in a number of
activities, including entering into certain transactions or paying interest
above a certain rate on new or renewed liabilities.
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If the OTS determines that an institution is in an unsafe or unsound
condition, or if the institution is deemed to be engaging in an unsafe and
unsound practice, the OTS may, if the institution is well capitalized,
reclassify it as adequately capitalized; if the institution is adequately
capitalized but not well capitalized, require it to comply with restrictions
applicable to undercapitalized institutions; and, if the institution is
undercapitalized, require it to comply with certain restrictions applicable to
significantly undercapitalized institutions.
Conservatorship/Receivership. In addition to the grounds discussed
under "--Prompt Corrective Action," the OTS (and, under certain circumstances,
the FDIC) may appoint a conservator or receiver for a savings association if
any one or more of a number of circumstances exist, including, without
limitation, the following: (i) the institution's assets are less than its
obligations to creditors and others, (ii) a substantial dissipation of assets
or earnings due to any violation of law or any unsafe or unsound practice,
(iii) an unsafe or unsound condition to transact business, (iv) a willful
violation of a final cease-and-desist order, (v) the concealment of the
institution's books, papers, records or assets or refusal to submit such items
for inspection to any examiner or lawful agent of the appropriate federal
banking agency or state bank or savings association supervisor, (vi) the
institution is likely to be unable to pay its obligations or meet its
depositors' demands in the normal course of business, (vii) the institution has
incurred, or is likely to incur, losses that will deplete all or substantially
all of its capital, and there is no reasonable prospect for the institution to
become adequately capitalized without federal assistance, (viii) any violation
of law or unsafe or unsound practice that is likely to cause insolvency or
substantial dissipation of assets or earnings, weaken the institution's
condition, or otherwise seriously prejudice the interests of the institution's
depositors or the federal deposit insurance fund, (ix) the institution is
undercapitalized and the institution has no reasonable prospect of becoming
adequately capitalized, fails to become adequately capitalized when required to
do so, fails to submit a timely and acceptable capital restoration plan, or
materially fails to implement an accepted capital restoration plan, (x) the
institution is critically undercapitalized or otherwise has substantially
insufficient capital, or (xi) the institution is found guilty of certain
criminal offenses related to money laundering.
Enforcement Powers. The OTS and, under certain circumstances, the
FDIC, have substantial enforcement authority with respect to savings
associations, including authority to bring various enforcement actions against
a savings association and any of its "institution-affiliated parties" (a term
defined to include, among other persons, directors, officers, employees,
controlling stockholders, agents and stockholders who participate in the
conduct of the affairs of the institution). This enforcement authority
includes, without limitation: (i) the ability to terminate a savings
association's deposit insurance, (ii) institute cease-and-desist proceedings,
(iii) bring suspension, removal, prohibition and criminal proceedings against
institution-affiliated parties, and (iv) assess substantial civil money
penalties. As part of a cease-and-desist order, the agencies may require a
savings association or an institution-affiliated party to take affirmative
action to correct conditions resulting from that party's actions, including to
make restitution or provide reimbursement, indemnification or guarantee against
loss; restrict the growth of the institution; and rescind agreements and
contracts.
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Capital Distribution Regulation. In addition to the prompt corrective
action restriction on paying dividends, OTS regulations limit certain "capital
distributions" by OTS-regulated savings associations. Capital distributions are
defined to include, in part, dividends and payments for stock repurchases and
cash-out mergers.
Under the regulation, an association that meets its fully phased-in
capital requirements both before and after a proposed distribution and has not
been notified by the OTS that it is in need of more than normal supervision (a
"Tier 1 association") may, after prior notice to but without the approval of
the OTS, make capital distributions during a calendar year up to the higher of:
(i) 100% of its net income to date during the calendar year plus the amount
that would reduce by one-half its surplus capital ratio at the beginning of the
calendar year, or (ii) 75% of its net income over the most recent four-quarter
period. A Tier 1 association may make capital distributions in excess of the
above amount if it gives notice to the OTS and the OTS does not object to the
distribution. A savings association that meets its regulatory capital
requirements both before and after a proposed distribution but does not meet
its fully phased-in capital requirement (a "Tier 2 association") is authorized,
after prior notice to the OTS but without OTS approval, to make capital
distributions in an amount up to 75% of its net income over the most recent
four-quarter period, taking into account all prior distributions during the
same period. Any distribution in excess of this amount must be approved in
advance by the OTS. A savings association that does not meet its current
regulatory capital requirements (a "Tier 3 association") cannot make any
capital distribution without prior approval from the OTS, unless the capital
distribution is consistent with the terms of a capital plan approved by the
OTS.
The Bank qualifies as a Tier 1 association for purposes of the capital
distribution rule. The OTS may prohibit a proposed capital distribution that
would otherwise be permitted if the OTS determines that the distribution would
constitute an unsafe or unsound practice. The requirements of the capital
distribution regulation supersede less stringent capital distribution
restrictions in earlier agreements or conditions.
The OTS has proposed to amend its capital distribution regulation to
conform its requirements to the OTS prompt corrective action regulation. Under
the proposed regulation, an institution that would remain at least adequately
capitalized after making a capital distribution, and that was owned by a
holding company, would be required to provide notice to the OTS prior to making
a capital distribution. "Troubled" associations and undercapitalized
associations would be allowed to make capital distributions only by filing an
application and receiving OTS approval, and such applications would be approved
under certain limited circumstances.
Qualified Thrift Lender Test. In general, savings associations are
required to maintain at least 65% of their portfolio assets in certain
qualified thrift investments (which consist primarily of loans and other
investments related to residential real estate and certain other assets). A
savings association that fails the qualified thrift lender test is subject to
substantial restrictions on activities and to other significant penalties.
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<PAGE> 145
Recent legislation permits a savings association to qualify as a
qualified thrift lender not only by maintaining 65% of portfolio assets in
qualified thrift investments (the "QTL test") but also, in the alternative, by
qualifying under the Internal Revenue Code as a "domestic building and loan
association." The Bank is a domestic building and loan association as defined
in the Internal Revenue Code.
Recent legislation also expands the QTL test to provide savings
associations with greater authority to lend and diversify their portfolios. In
particular, credit card and educational loans may now be made by savings
associations without regard to any percentage-of-assets limit, and commercial
loans may be made in an amount up to 10 percent of total assets, plus an
additional 10 percent for small business loans. Loans for personal, family and
household purposes (other than credit card, small business and educational
loans) are now included without limit with other assets that, in the aggregate,
may account for up to 20% of total assets. At April 30, 1997, under the
expanded QTL test, approximately 86.2% of the Bank's portfolio assets were
qualified thrift investments.
FDIC Assessments. The deposits of the Bank are insured to the maximum
extent permitted by the BIF, which is administered by the FDIC, and are backed
by the full faith and credit of the U.S. Government. As insurer, the FDIC is
authorized to conduct examinations of, and to require reporting by,
FDIC-insured institutions. It also may prohibit any FDIC-insured institution
from engaging in any activity the FDIC determines by regulation or order to
pose a serious threat to the FDIC. The FDIC also has the authority to initiate
enforcement actions against savings institutions, after giving the OTS an
opportunity to take such action.
The FDIC may terminate the deposit insurance of any insured depository
institution, including the Bank, if it determines after a hearing that the
institution has engaged or is engaging in unsafe or unsound practices, is in an
unsafe or unsound condition to continue operations, or has violated any
applicable law, regulation, order or any condition imposed by an agreement with
the FDIC. It also may suspend deposit insurance temporarily during the hearing
process for the permanent termination of insurance, if the institution has no
tangible capital. If insurance of accounts is terminated, the accounts at the
institution at the time of the termination, less subsequent withdrawals, shall
continue to be insured for a period of six months to two years, as determined
by the FDIC. Management is aware of no existing circumstances which would
result in termination of the Bank's deposit insurance.
The BIF fund met its target reserve level in September 1995, but the
SAIF was not expected to meet its target reserve level until at least 2002.
Consequently, in late 1995, the FDIC approved a final rule regarding deposit
insurance premiums which, effective with respect to the semiannual premium
assessment beginning January 1, 1996, reduced deposit insurance premiums for
BIF member institutions to zero basis points (subject to an annual minimum of
$2,000) for institutions in the lowest risk category. Deposit insurance
premiums for SAIF members were maintained at their existing levels (23 basis
points for institutions in the lowest risk category).
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On September 30, 1996, President Clinton signed into law legislation
to eliminate the premium differential between SAIF-insured institutions and
BIF-insured institutions by recapitalizing the SAIF's reserves to the required
ratio of 1.25% of insured deposits. The legislation provided that the holders
of SAIF-assessable deposits pay a one-time special assessment to recapitalize
the SAIF. The legislation also provided for the merger of the BIF and the
SAIF, with such merger being conditioned upon the prior elimination of the
thrift charter. Effective October 8, 1996, FDIC regulations imposed a one-time
special assessment equal to 65.7 basis points for all SAIF-assessable deposits
as of March 31, 1995, which was collected on November 27, 1996.
Following the imposition of the one-time special assessment, the FDIC
lowered assessment rates for SAIF members to reduce the disparity in the
assessment rates paid by BIF and SAIF members. Beginning October 1, 1996,
effective BIF and SAIF rates both range from zero basis points to 27 basis
points. From 1997 through 1999, FDIC-insured institutions will pay
approximately 1.3 basis points of their BIF-assessable deposits and 6.4 basis
points of their SAIF-assessable deposits to fund the Financing Corporation.
The Bank's insurance premiums, which had amounted to the minimum $2,000 annual
fee for its BIF-insured deposits, were increased to 1.3 basis points. Based
upon the $1.59 billion of assessable deposits at April 30, 1997, the Bank would
expect to pay $50,000 in insurance premiums per quarter during 1997.
Thrift Charter. Congress has been considering legislation in various
forms that would require federal thrifts, such as the Bank, to convert their
charters to national or state bank charters. Recent legislation required the
Treasury Department to prepare for Congress a comprehensive study on
development of a common charter for federal savings associations and commercial
banks; and, in the event that the thrift charter was eliminated by January 1,
1999, would require the merger of the BIF and the SAIF into a single Deposit
Insurance Fund on that date. The Bank cannot determine whether, or in what
form, such legislation may eventually be enacted and there can be no assurance
that any legislation that is enacted would not adversely affect the Bank and
its parent holding company.
Community Reinvestment Act and the Fair Lending Laws. Savings
associations have a responsibility under CRA and related regulations of the OTS
to help meet the credit needs of their communities, including low-and
moderate-income neighborhoods. In addition, the Equal Credit Opportunity Act
and the Fair Housing Act (together, the "Fair Lending Laws") prohibit lenders
from discriminating in their lending practices on the basis of characteristics
specified in those statutes. An institution's failure to comply with the
provisions of CRA could, at a minimum, result in regulatory restrictions on its
activities, and failure to comply with the Fair Lending Laws could result in
enforcement actions by the OTS, as well as other federal regulatory agencies
and the Department of Justice.
New Safety and Soundness Guidelines. The OTS and the other federal
banking agencies have established guidelines for safety and soundness,
addressing operational and managerial, as well as compensation matters for
insured financial institutions. Institutions failing to meet these standards
are required to submit compliance plans to their appropriate federal
regulators. The
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OTS and the other agencies have also established guidelines regarding asset
quality and earnings standards for insured institutions.
Change of Control. Subject to certain limited exceptions, no company
can acquire control of a savings association without the prior approval of the
OTS, and no individual may acquire control of a savings association if the OTS
objects. Any company that acquires control of a savings association becomes a
savings and loan holding company subject to extensive registration, examination
and regulation by the OTS. Conclusive control exists, among other ways, when an
acquiring party acquires more than 25% of any class of voting stock of a
savings association or savings and loan holding company, or controls in any
manner the election of a majority of the directors of the company. In addition,
a rebuttable presumption of control exists if, among other things, a person
acquires more than 10% of any class of a savings association or savings and
loan holding company's voting stock (or 25% of any class of stock) and, in
either case, any of certain additional control factors exist.
Under recent legislation, companies subject to the Bank Holding
Company Act that acquire or own savings associations are no longer defined as
savings and loan holding companies under the HOLA and, therefore, are not
generally subject to supervision and regulation by the OTS. OTS approval is no
longer required for a bank holding company to acquire control of a savings
association, although the OTS has a consultative role with the FRB in
examination, enforcement and acquisition matters.
TAXATION
FEDERAL TAXATION
GENERAL. The Company and the Bank will be subject to federal income
taxation in the same general manner as other corporations with some exceptions
discussed below. The following discussion of federal taxation is intended only
to summarize certain pertinent federal income tax matters and is not a
comprehensive description of the tax rules applicable to the Bank. The Bank's
federal income tax returns have been audited or closed without audit by the
Internal Revenue Service through 1993.
METHOD OF ACCOUNTING. For federal income tax purposes, the Bank
currently reports its income and expenses on the accrual method of accounting
and uses a tax year ending December 31 for filing its consolidated federal
income tax returns. The Small Business Protection Act of 1996 (the "1996 Act")
eliminated the use of the reserve method of accounting for bad debt reserves by
savings institutions, effective tax taxable years beginning after 1995.
BAD DEBT RESERVES. Prior to the 1996 Act, the Bank was permitted to
establish a reserve for bad debts and to make annual additions to the reserve.
These additions could, within specified formula limits, be deducted in arriving
at the Bank's taxable income. As a result of the 1996 Act, the Bank must use
the specific chargeoff method in computing its bad debt deduction
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beginning with its 1996 Federal tax return. In addition, the federal
legislation requires the recapture (over a six year period) of the excess of
tax bad debt reserves at December 31, 1995 over those established as of
December 31, 1987. The amount of such reserve subject to recapture as of
December 31, 1996 is approximately $8.4 million.
As discussed more fully below, the Bank and subsidiaries file combined
New York State Franchise and New York City Financial Corporation tax returns.
The basis of the determination of each tax is the greater of a tax on entire
net income (or on alternative entire net income) or a tax computed on taxable
assets. However, for state purposes, New York State enacted legislation in
1996, which among other things, decoupled the Federal and New York State tax
laws regarding thrift bad debt deductions and permits the continued use of the
bad debt reserve method under section 593. Thus, provided the Bank continues
to satisfy certain definitional tests and other conditions, for New York State
and City income tax purposes, the Bank is permitted to continue to use the
special reserve method for bad debt deductions. The deductible annual addition
to the state reserve may be computed using a specific formula based on the
Bank's loss history ("Experience Method") or a statutory percentage equal to
32% of the Bank's New York State or City taxable income ("Percentage Method").
TAXABLE DISTRIBUTIONS AND RECAPTURE. Prior to the 1996 Act, bad debt
reserves created prior to January 1, 1988 were subject to recapture into
taxable income should the Bank fail to meet certain thrift asset and
definitional tests. New federal legislation eliminated these thrift related
recapture rules. However, under current law, pre-1988 reserves remain subject
to recapture should the Bank make certain non-dividend distributions or cease
to maintain a bank charter.
At December 31, 1996 the Bank's total federal pre-1988 reserve was
approximately $11.7 million. This reserve reflects the cumulative effects of
federal tax deductions by the Bank for which no Federal income tax provision
has been made.
MINIMUM TAX. The Code imposes an alternative minimum tax ("AMT") at a
rate of 20% on a base of regular taxable income plus certain tax preferences
("alternative minimum taxable income" or "AMTI"). The AMT is payable to the
extent such AMTI is in excess of an exemption amount. Net operating losses can
offset no more than 90% of AMTI. Certain payments of alternative minimum tax
may be used as credits against regular tax liabilities in future years. The
Bank has not been subject to the alternative minimum tax and has no such
amounts available as credits for carryover.
NET OPERATING LOSS CARRYOVERS. A financial institution may carry back
net operating losses to the preceding three taxable years and forward to the
succeeding 15 taxable years. This provision applies to losses incurred in
taxable years beginning after 1986. At December 31, 1996, the Bank had no net
operating loss carryforwards for federal income tax purposes.
CORPORATE DIVIDENDS-RECEIVED DEDUCTION. The Company may exclude from
its income 100% of dividends received from the Bank as a member of the same
affiliated group of
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corporations. The corporate dividends-received deduction is 80% in the case of
dividends received from corporations with which a corporate recipient does not
file a consolidated tax return, and corporations which own less than 20% of the
stock of a corporation distributing a dividend may deduct only 70% of dividends
received or accrued on their behalf.
STATE AND LOCAL TAXATION
NEW YORK STATE AND NEW YORK CITY TAXATION. The Company and the Bank
will report income on a combined calendar year basis to both New York State and
New York City. New York State Franchise Tax on corporations is imposed in an
amount equal to the greater of (a) 9% of "entire net income" allocable to New
York State (b) 3% of "alternative entire net income" allocable to New York
State (c) 0.01% of the average value of assets allocable to New York State or
(d) nominal minimum tax. Entire net income is based on federal taxable income,
subject to certain modifications. Alternative entire net income is equal to
entire net income without certain modifications. The New York City Corporation
Tax is imposed using similar alternative taxable income methods and rates.
A temporary Metropolitan Transportation Business Tax Surcharge on
Banking corporations doing business in the Metropolitan District has been
applied since 1982. The Bank transacts a significant portion of its business
within this District and is subject to this surcharge. For the tax year ended
December 31, 1996, the surcharge rate is 17% of the State franchise tax
liability. For 1996, an additional 2.5% tax surcharge on the New York State
Franchise Tax is also imposed on the Company. New York City does not impose
surcharges applicable to the Company.
DELAWARE STATE TAXATION. As a Delaware holding company not earning
income in Delaware, the Company is exempt from Delaware corporate income tax
but is required to file an annual report with and pay an annual franchise tax
to the State of Delaware. The tax is imposed as a percentage of the capital
base of the Company with an annual maximum of $150,000.
MANAGEMENT
MANAGEMENT OF THE COMPANY
The Board of Directors of the Company is divided into three classes,
each of which contains approximately one-third of the Board. The directors
shall be elected by the stockholders of the Company for staggered three year
terms, or until their successors are elected and qualified. One class of
directors, consisting of Messrs. Bartels, Coyle, Morris and Nelson has a term
of office expiring at the first annual meeting of stockholders, a second class,
consisting of Messrs. Banks, Kelleher and Mehrberg has a term of office
expiring at the second annual meeting of stockholders and a third class,
consisting of Messrs. Doherty, Horn and O'Mara has a term of office expiring at
the third annual meeting of stockholders. Their names and biographical
information are set forth under "- Management of the Bank."
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The following individuals are executive officers of the Company and
hold the offices set forth below opposite their names.
<TABLE>
<CAPTION>
EXECUTIVE POSITION HELD WITH COMPANY
-------------------------- --------------------------------------------------
<S> <C>
Harry P. Doherty Chairman of the Board and Chief Executive Officer
James R. Coyle President and Chief Operating Officer
Edward J. Klingele Senior Vice President and Chief Financial Officer
Patricia J. Villani Corporate Secretary
</TABLE>
The executive officers of the Company are elected annually and hold
office until their respective successors have been elected and qualified or
until death, resignation or removal by the Board of Directors.
Information concerning the principal occupations, employment and
compensation of the directors and officers of the Company during the past five
years is set forth under "- Management of the Bank" and "- Executive Officers
Who Are Not Trustees." Directors of the Company initially will not be
compensated by the Company but will serve and be compensated by the Bank. It
is not anticipated that separate compensation will be paid to directors of the
Company until such time as such persons devote significant time to the separate
management of the Company's affairs, which is not expected to occur until the
Company becomes actively engaged in additional businesses other than holding
the stock of the Bank. The Company may determine that such compensation is
appropriate in the future.
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MANAGEMENT OF THE BANK
The following table sets forth certain information regarding the
Board of Trustees of the Bank.
<TABLE>
<CAPTION>
Positions Held
With Trustee
Name Age(1) the Bank Since
-------------------------------------- ---------- ------------------------------------- ----------
<S> <C> <C> <C>
Harold Banks 73 Trustee 1983
Charles J. Bartels 73 Trustee 1964
James R. Coyle 50 Trustee, President and Chief 1990
Operating Officer
Harry P. Doherty 55 Chairman of the Board and Chief 1989
Executive Officer
William G. Horn 73 Trustee 1968
Dennis P. Kelleher 58 Trustee 1988
Julius Mehrberg 68 Trustee 1996
John R. Morris 58 Trustee 1986
Kenneth W. Nelson 74 Trustee 1977
William E. O'Mara 66 Trustee 1994
</TABLE>
- ------------
(1) As of June 30, 1997.
Set forth below is information with respect to the principal
occupations during at least the last five years for the trustees of the Bank.
Harold Banks. Mr. Banks is a cemetarian and Executive Director,
Secretary and Treasurer of Ocean View The Cemetery Beautiful, Staten Island,
New York, since 1979. Mr. Banks also serves on the Boards of the Elmweir
Cemetery Association and Mt. Zion Cemetery.
Charles J. Bartels. Mr. Bartels is President and Chief Executive
Officer of Bartels & Eleford, Inc., a real estate appraisal firm located in
Staten Island, New York.
James R. Coyle. Mr. Coyle has served as President and Chief Operating
Officer of the Bank since June 1990. Previously, Mr. Coyle served as Executive
Vice President from 1987 to 1990 and as Chief Financial Officer from 1989 to
1990. Mr. Coyle has been employed by the Bank since 1970. Mr. Coyle is a
member of the Board of the Center for Financial Studies, Fairfield, Connecticut,
and is a member of the Community Bankers Association of New York State
("CBANYS").
Harry P. Doherty. Mr. Doherty has served as Chairman of the Board and
Chief Executive Officer of the Bank since May 1990. Previously, Mr. Doherty
served as President and Chief Operating Officer from 1989 to 1990 and Executive
Vice President from 1987 to 1989. Mr.
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Doherty has been employed by the Bank since 1966. Mr. Doherty serves as a
director of the Institutional Investors Capital Appreciation Mutual Fund as
well as the MSB Fund. Mr. Doherty currently is serving as Chairman of CBANYS
and as a director of America's Community Bankers ("ACB").
William G. Horn. Mr. Horn is currently retired. Previously, Mr. Horn
was a Senior Account Agent for the Allstate Insurance Company.
Dennis P. Kelleher. Mr. Kelleher is Chief Executive Officer of Wall
Street Access (formerly Wall Street Investors Services), a financial services
company and member firm of the NYSE, located in New York City. Mr. Kelleher
also serves as a director of the Irish Investment Fund, a closed end investment
company listed on the NYSE having a main investment focus in Irish-based
securities.
Julius Mehrberg. Mr. Mehrberg is a principal and partner in various
real estate development and management companies, primarily Fingerboard Estates
Corp., located in Staten Island, New York.
John R. Morris. Mr. Morris retired from Merrill Lynch in May 1997
where he served as a Vice President of the Capital Markets and Private Client
groups. Mr. Morris has over 35 years of experience in the financial services
area. Mr. Morris currently is a private investor and is self-employed as a
consultant.
Kenneth W. Nelson. Mr. Nelson is President and Chief Executive
Officer of Tech Products, Inc., a manufacturing and marketing company located
in Staten Island, New York. Mr. Nelson is also Chairman of Methods Research
Corp., importing and marketing company located in Farmingdale, New Jersey, and
President and Chief Executive Officer of Carey Realty Corp., a real estate
holding company located in Staten Island, New York. Mr. Nelson also serves as
a director of American Centurion Life Assurance Co., a subsidiary of American
Express Insurance and Annuities, and of First Fortis Life Insurance Company, a
subsidiary of Fortis, Inc. Insurance and Annuities.
William E. O'Mara. Mr. O'Mara is a partner in the firm of Wohl and
O'Mara, civil engineers and land surveyors, located in Staten Island, New York.
EXECUTIVE OFFICERS WHO ARE NOT TRUSTEES
Set forth below is information with respect to the principal
occupations during the last five years for the executive officers of the Bank
who do not serve as trustees.
John P. Brady. Age 46 years. Mr. Brady has served as Executive Vice
President and Chief Lending Officer of the Bank since May 1987. Mr. Brady has
been employed by the Bank since 1982 and previously served as Vice President
and mortgage officer and as the Community Reinvestment Act officer for the
Bank.
Frank J. Besignano. Age 42 years. Mr. Besignano has served as Senior
Vice President of the Bank for Marketing, Business Development and Compliance
since May 1991. Mr.
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Besignano has been employed by the Bank since 1982 and previously served as
Vice President and marketing officer since 1987.
Edward J. Klingele. Age 44 years. Mr. Klingele has served as Senior
Vice President and Chief Financial Officer of the Bank since May 1990. Mr.
Klingele has been employed by the Bank since 1976 and previously served as
Controller of the Bank from 1984 to 1990.
Deborah Pagano. Age 42 years. Ms. Pagano has served as Senior Vice
President - Branch Administration for the Bank since May 1989. Ms. Pagano has
been employed by the Bank since 1976 and previously served as Vice President
of the Bank from 1984 to 1989.
Donald C. Fleming. Age 48 years. Mr. Fleming has served as Senior
Vice President of the Bank for Strategic Planning and Technical Services since
January 1997. Previously, Mr. Fleming served as Director, Executive Vice
President and Chief Financial Officer of North Side Savings Bank, Floral Park,
New York, from 1988 to 1996.
TRUSTEES' COMPENSATION
Members of the Bank's Board of Trustees, except for Messrs. Doherty
and Coyle, receive $1,800 per meeting attended of the Board and $1,200 per
committee meeting ($600 in the case of the Loan Review Committee) attended.
The Chairman of each committee of the Board also receives $1,500 per meeting
attended ($750 in the case of the Loan Review Committee). Board fees are
subject to periodic adjustment by the Board of Trustees. In addition to fees
paid to trustees for Board and committee meetings, the Bank's trustees are
expected to participate in the Stock Option Plan and the Recognition Plan. See
"- Benefits - Stock Option Plan" and "- Recognition and Retention Plan."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Determinations regarding compensation of the Bank's employees are made
by the Compensation Committee of the Board of Trustees. Harry P. Doherty,
Chief Executive Officer and James R. Coyle, President and Chief Operating
Officer, as well as Dennis E. Knudsen, a trustee emeritus who formerly served
as Chief Executive Officer of the Bank until his retirement in 1990, serve as
members of the Compensation Committee.
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SUMMARY COMPENSATION TABLE
The following table sets forth a summary of certain information
concerning the compensation paid by the Bank (including amounts deferred to
future periods by the officers) for services rendered in all capacities during
the year ended December 31, 1996 to the Chairman and Chief Executive Officer
of the Bank and the four other most highly compensated officers of the Bank.
<TABLE>
<CAPTION>
==================================================================================================================================
Annual Compensation Long Term Compensation
--------------------------------------- ---------------------------------------
Awards Payouts
Other ------------------------ ------------
Name and Annual Securities LTIP All Other
Principal Position Year Salary Bonus Compensation(1) Restricted Underlying Payouts Compensation(2)
Stock Options
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Harry P. Doherty
Chairman and
Chief Executive
Officer 1996 $356,457 -- -- -- -- -- $43,500
- ----------------------------------------------------------------------------------------------------------------------------------
James R. Coyle
President and
Chief Operating
Officer 1996 275,715 -- -- -- -- -- 35,680
- ----------------------------------------------------------------------------------------------------------------------------------
John P. Brady
Executive Vice
President 1996 137,909 -- -- -- -- -- 20,500
- ----------------------------------------------------------------------------------------------------------------------------------
Deborah Pagano
Senior Vice
President 1996 117,394 -- -- -- -- -- 18,053
- ----------------------------------------------------------------------------------------------------------------------------------
Edward J. Klingele
Senior Vice
President 1996 116,833 -- -- -- -- -- 15,876
==================================================================================================================================
</TABLE>
- ---------------
(1) Does not include amounts attributable to miscellaneous benefits
received by the named executive officer. In the opinion of management
of the Bank, the costs to the Bank of providing such benefits to the
named executive officer during the year ended December 31, 1996 did
not exceed the lesser of $50,000 or 10% of the total of annual salary
and bonus reported for the individual.
(2) Consists of the Bank's contributions to the Bank's 401(k) profit
sharing plan to the account of the named executive officers, as well
as $13,500 and $5,680 allocated to Messrs. Doherty and Coyle,
respectively, pursuant to the Bank's Supplemental Executive Retirement
Plan ("SERP").
EMPLOYMENT AGREEMENTS
In connection with the Conversion, the Company and the Bank (the
"Employers") intend to enter into employment agreements with each of Messrs.
Doherty, Coyle and the Other Senior Officers . The Employers have agreed to
employ the executives for a term of three years, in each case in their current
respective positions. The agreements with the executives will be initially at
their current salary levels. The executives' compensation and expenses shall
be paid by the
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Company and the Bank in the same proportion as the time and services actually
expended by the Executives on behalf of each respective Employer. With respect
to Messrs. Doherty and Coyle, the employment agreements will be reviewed
annually, and with respect to the Other Senior Officers, the employment
agreements will be reviewed prior to the second anniversary and each
anniversary thereafter by the Boards of Directors of the Employers. At such
times, the term of the executives' employment agreements shall be extended each
year for a successive additional one-year period upon the approval of the
Employers' Boards of Directors, unless either party elects, not less than 30
days prior to the annual anniversary date, not to extend the employment term.
Each of the employment agreements shall be terminable with or without
cause by the Employers. The executives shall have no right to compensation or
other benefits pursuant to the employment agreements for any period after
voluntary termination or termination by the Employers for cause, disability or
retirement. The agreements provide for certain benefits in the event of the
executive's death. In the event that (i) the executive terminates his or her
employment because of failure to comply with any material provision of the
employment agreement or the Employers change the executive's title or duties or
(ii) the employment agreement is terminated by the Employers other than for
cause, disability, retirement or death or by the executive as a result of
certain adverse actions which are taken with respect to the executive's
employment following a change in control of the Company, as defined, Messrs.
Doherty and Coyle will be entitled to a cash severance amount equal to three
times their average annual compensation, as defined, plus an amount to
reimburse the executives for certain tax obligations, and the Other Senior
Officers will be entitled to a cash severance amount equal to two times their
average annual compensation, as defined.
A change in control is generally defined in the employment agreements
to include any change in control of the Company required to be reported under
the federal securities laws, as well as (i) the acquisition by any person of
20% or more of the Company's outstanding voting securities and (ii) a change in
a majority of the directors of the Company during any three-year period without
the approval of at least two-thirds of the persons who were directors of the
Company at the beginning of such period.
With respect to the employment agreements with the Other Senior
Officers, each employment agreement provides that in the event that any of the
payments to be made thereunder or otherwise upon termination of employment are
deemed to constitute "excess parachute payments," within the meaning Section
280G of the Code, then such payments and benefits received thereunder shall be
reduced, with the manner determined by the executive, by the amount, if any,
which is the minimum necessary to result in no portion of the payments
generally are payments in excess of three times the recipient's average annual
compensation from the employer includable in the recipient's gross income
during the most recent five taxable years ending before the date on which a
change in control of the employer occurred. Recipients of excess parachute
payments are subject to a 20% excise tax on the amount by which such payments
exceed the base amount, in addition to regular income taxes, and payments in
excess
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of the base amount are not deductible by the employer as compensation expense
for federal income tax purposes.
Although the above-described employment agreements could increase the
cost of any acquisition of control of the Company, management of the Company
does not believe that the terms thereof would have a significant anti-takeover
effect. The Company and/or the Bank may determine to enter into similar
employment agreements with other officers in the future.
BENEFITS
EMPLOYEE STOCK OWNERSHIP PLAN. The Company has established the ESOP
for employees of the Company and the Bank to become effective upon the
Conversion. Full-time employees of the Company and the Bank who have been
credited with at least 1,000 hours of service during a twelve month period are
eligible to participate in the ESOP.
As part of the Conversion, in order to fund the purchase of up to 8%
of the Common Stock to be issued in the Conversion, it is anticipated that the
ESOP will borrow funds from the Company. It is anticipated that such loan will
equal 100% of the aggregate purchase price of the Common Stock acquired by the
ESOP. The loan to the ESOP will be repaid principally from the Company's and
the Bank's contributions to the ESOP over a period of not less than 15 years,
and the collateral for the loan will be the Common Stock purchased by the ESOP.
The interest rate for the ESOP loan is expected to be a fixed rate of 8.5%.
The Bank also intends to use matching contributions made with respect to ESOP
participants' 401(k) profit sharing plan contributions to satisfy the ESOP loan
obligation. The Company may, in any plan year, make additional discretionary
contributions for the benefit of plan participants in either cash or shares of
Common Stock, which may be acquired through the purchase of outstanding shares
in the market or from individual stockholders, upon the original issuance of
additional shares by the Company or upon the sale of treasury shares by the
Company. Such purchases, if made, would be funded through additional
borrowings by the ESOP or additional contributions from the Company. The
timing, amount and manner of future contributions to the ESOP will be affected
by various factors, including prevailing regulatory policies, the requirements
of applicable laws and regulations and market conditions.
Shares purchased by the ESOP with the proceeds of the loan will be
held in a suspense account and released to participants on a pro rata basis as
debt service payments are made. Shares released from the ESOP will be
allocated to the accounts of ESOP participants pursuant to two methods. First,
for each eligible ESOP participant, a portion of the shares released for the
plan year will be allocated to a special "matching" account under the ESOP
equal in value to the amount matching the contribution, if any, that such
participant would be entitled to under the terms of the Bank's 401(k) profit
sharing plan for the plan year. Second, the remaining shares which have been
released for the plan year will be allocated to each eligible participant's
general ESOP account based on the ratio of each such participant's base
compensation to the total base compensation of all eligible ESOP participants.
Forfeitures will be reallocated among remaining participating employees and may
reduce any amount the Company might otherwise
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have contributed to the ESOP. Upon the completion of two years of service, the
account balances of participants within the ESOP will become 20% vested and
will continue to vest at the rate of 20% for each additional year of service
completed by the participant, such that a participant will become 100% vested
upon the completion of six years of service. Credit is given for years of
service with the Bank prior to adoption of the ESOP. In the case of a "change
in control," as defined, however, participants will become immediately fully
vested in their account balances. Benefits may be payable upon retirement or
separation from service. The Company's contributions to the ESOP are not
fixed, so benefits payable under the ESOP cannot be estimated.
Messrs. Bartels, Horn, Morris, Doherty and Coyle will serve as
trustees of the ESOP. Under the ESOP, the trustees must vote all allocated
shares held in the ESOP in accordance with the instructions of the
participating employees, and unallocated shares will be voted in the same ratio
on any matter as those allocated shares for which instructions are given.
See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Impact Accounting Pronouncements" for a discussion of
SOP 93-6, which addresses the measure of compensation expense recorded by
employers for leveraged ESOPs from the cost of ESOP shares to the fair value of
ESOP shares.
GAAP requires that any third party borrowing by the ESOP be reflected
as a liability on the Company's statement of financial condition. Since the
ESOP is borrowing from the Company, such obligation is not treated as a
liability, but will be excluded from stockholders' equity. If the ESOP
purchases newly issued shares from the Company, total stockholders' equity
would neither increase nor decrease, but per share stockholders' equity and per
share net earnings would decrease as the newly issued shares are allocated to
the ESOP participants.
The ESOP will be subject to the requirements of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and the
regulations of the IRS and the Department of Labor thereunder.
STOCK OPTION PLAN. Following consummation of the Conversion, the
Board of Directors of the Company intends to adopt a Stock Option Plan, which
will be designed to attract and retain qualified personnel in key positions,
provide directors, officers and key employees with a proprietary interest in
the Company as an incentive to contribute to the success of the Company and
reward key employees for outstanding performance. The Stock Option Plan will
provide for the grant of incentive stock options intended to comply with the
requirements of Section 422 of the Code ("incentive stock options"),
non-incentive or compensatory stock options, stock appreciation rights and
limited rights which will be exercisable only upon a change in control of the
Company or the Bank (collectively "Awards"). Awards may be granted to
directors and key employees of the Company and any subsidiaries. The Stock
Option Plan will be administered and interpreted by a committee of the Board of
Directors ("Committee"). Unless sooner terminated, the Stock Option Plan shall
continue in effect for a period of 10 years from the date the Stock Option Plan
is adopted by the Board of Directors. Subject to any applicable OTS
regulations, upon exercise of "Limited Rights" in the event of a change in
control, the employee
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<PAGE> 158
will be entitled to receive a lump sum cash payment equal to the difference
between the exercise price of the related option and the fair market value of
the shares of common stock subject to the option on the date of exercise of the
right in lieu of purchasing the stock underlying the option.
Under the Stock Option Plan, the Committee will determine which
directors, officers and key employees will be granted Awards, whether options
will be incentive or compensatory options, the number of shares subject to each
Award, the exercise price of each option, whether options may be exercised by
delivering other shares of Common Stock and when such options become
exercisable. The per share exercise price of an incentive stock option must at
least equal the fair market value of a share of Common Stock on the date the
option is granted (110% of fair market value in the case of incentive stock
options granted to employees who are 5% stockholders). The granting or vesting
of stock options may be conditioned upon the achievement of individual or
company-wide performance goals, which could include goals such as the
achievement by the Company or the Bank of specified levels of net income, asset
growth, return on assets, return on equity or other specific performance goals.
At a meeting of stockholders of the Company following the Conversion,
which under applicable OTS regulations may be held no earlier than six months
after the completion of the Conversion, the Board of Directors intends to
present the Stock Option Plan to stockholders for approval and to reserve an
amount equal to 10% of the shares of Common Stock issued in the Offerings (or
3,559,523 shares based upon the issuance of 35,595,238 shares), for issuance
under the Stock Option Plan. OTS regulations provide that, in the event such
plan is implemented within the one year following the Conversion, no individual
officer or employee of the Bank may receive more than 25% of the options
granted under the Stock Option Plan and non-employee directors may not receive
more than 5% individually, or 30% in the aggregate of the options granted under
the Stock Option Plan. OTS regulations also provide that exercise price of any
options granted under any such plan must be the fair market value of the Common
Stock as of the date of grant. Each stock option or portion thereof will be
exercisable at any time on or after it vests and will be exercisable until 10
years after its date of grant or for periods of up to one year following the
death, disability or other termination of the optionee's employment or service
as a director. However, failure to exercise incentive stock options within
three months after the date on which the optionee's employment terminates may
result in adverse tax consequences to the optionee.
At the time an Award is granted pursuant to the Stock Option Plan, the
recipient will not be required to make any payment in consideration for such
grant. With respect to incentive or compensatory stock options, the optionee
will be required to pay the applicable exercise price at the time of exercise
in order to receive the underlying shares of Common Stock. The shares reserved
for issuance under the Stock Option Plan may be authorized but previously
unissued shares, treasury shares, or shares purchased by the Company on the
open market or from private sources. In the event of a stock split, reverse
stock split or stock dividend, the number of shares of Common Stock under the
Stock Option Plan, the number of shares to which any Award relates and the
exercise price per share under any option or stock appreciation right shall be
adjusted to reflect such increase or decrease in the total number of shares of
Common Stock outstanding.
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<PAGE> 159
In the event the Company declares a special cash dividend or return of capital
following the implementation of the Stock Option Plan in an amount per share
which exceeds 10% of the fair market value of a share of Common Stock as of the
date of declaration, the per share exercise price of all previously granted
options which remain unexercised as of the date of such declaration shall,
subject to certain limitations, be proportionately adjusted to give effect to
such special cash dividend or return of capital as of the date of payment of
such special cash dividend or return of capital.
Under current provisions of the Code, the federal income tax treatment
of incentive stock options and compensatory stock options is different. As
regards incentive stock options, an optionee who meets certain holding period
requirements will not recognize income at the time the option is granted or at
the time the option is exercised, and a federal income tax deduction generally
will not be available to the Company at any time as a result of such grant or
exercise. With respect to compensatory stock options, the difference between
the fair market value on the date of exercise and the option exercise price
generally will be treated as compensation income upon exercise, and the Company
will be entitled to a deduction in the amount of income so recognized by the
optionee. Upon the exercise of a stock appreciation right, the holder will
realize income for federal income tax purposes equal to the amount received by
him, whether in cash, shares of stock or both, and the Company will be entitled
to a deduction for federal income tax purposes in the same amount.
It is currently expected that the Stock Option Plan will provide that
no individual officer will be able to receive stock options for more than 25%
of the shares available under the Stock Option Plan, or 889,880 shares if the
amount of Common Stock sold in the Conversion is equal to the maximum of the
Valuation Range, vesting over a five-year period (or 3,559,523 shares per year
based upon the maximum of the Valuation Range).
RECOGNITION PLAN. Following consummation of the Conversion, the Board
of Directors of the Company intends to adopt a Recognition Plan for directors,
officers and employees. The objective of the Recognition Plan will be to
enable the Company to provide directors, officers and employees with a
proprietary interest in the Company as an incentive to contribute to its
success. The Company intends to present the Recognition Plan to stockholders
for their approval at a meeting of stockholders which, pursuant to applicable
OTS regulations, may be held no earlier than six months subsequent to
completion of the Conversion.
The Recognition Plan will be administered by a committee of the Board
of Directors, which will have the responsibility to invest all funds
contributed to the trust created for the Recognition Plan (the "Trust"). The
Company will contribute sufficient funds to the Trust so that the Trust can
purchase, following the receipt of stockholder approval, a number of shares
equal to an aggregate of 4% of the Common Stock sold in the Conversion
(1,423,809 shares, based on the sale of 35,595,238 shares at the maximum of the
Valuation Range). Shares of Common Stock granted pursuant to the Recognition
Plan generally will be in the form of restricted stock vesting at the rate of
20% per year over the five years following the date of grant. For accounting
purposes, compensation expense in the amount of the fair market value of the
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<PAGE> 160
Common Stock at the date of the grant to the recipient will be recognized pro
rata over the period during which the shares are payable. A recipient will be
entitled to all voting and other stockholder rights, except that the shares,
while restricted, may not be sold, pledged or otherwise disposed of and are
required to be held in the Trust. Under the terms of the Recognition Plan,
recipients of awards will be entitled to instruct the trustee of the
Recognition Plan as to how the underlying shares should be voted, and the
trustee will be entitled to vote all unallocated shares in its discretion. If
a recipient's employment is terminated as a result of death or disability, all
restrictions will expire and all allocated shares will become unrestricted.
The Board of Directors of the Company can terminate the Recognition Plan at any
time, and if it does so, any shares not allocated will revert to the Company.
Recipients of grants under the Recognition Plan will not be required to make
any payment at the time of grant or when the underlying shares of Common Stock
become vested, other than payment of withholding taxes.
It is currently expected that the Recognition Plan will provide that
no individual officer will be able to receive an award for more than 25% of the
shares available under the Recognition Plan, or 355,952 shares if the amount of
Common Stock sold in the Conversion is equal to the maximum of the Valuation
Range, vesting over a five-year period (or 71,190 shares per year based upon
the maximum of the Valuation Range).
RETIREMENT PLAN. The Bank maintains a non-contributory, tax-qualified
defined benefit pension plan (the "Retirement Plan") for eligible employees.
All salaried employees at least age 21 who have completed at least one year of
service are eligible to participate in the Retirement Plan. The Retirement
Plan provides for a benefit for each participant, including executive officers
named in the Executive Compensation Table above, equal to 2% of the
participant's final average compensation (average annual compensation during
the 36 consecutive calendar months during the final 120 consecutive calendar
months of employment) multiplied by the participant's years (and any fraction
thereof) of eligible employment (up to a maximum of 30 years). A participant
is fully vested in his or her benefit under the Retirement Plan after five
years of service. The Retirement Plan is funded by the Bank on a actuarial
basis and all assets are held in trust by the Retirement Plan trustee.
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<PAGE> 161
The following table illustrates the annual benefit payable upon normal
retirement at age 65 (in single life annuity amounts with no offset for Social
Security benefits) at various levels of compensation and years of service under
the Retirement Plan and the Supplemental Executive Retirement Plan ("SERP")
maintained by the Bank.
<TABLE>
<CAPTION>
Years of Service
-----------------------------------------------------------------------------------
Remuneration 15 20 25 30 35
---------------- ----------- ------------ ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C>
$125,000 $37,500 $50,000 $62,500 $75,000 $75,000
150,000 45,000 60,000 75,000 90,000 90,000
175,000 52,500 70,000 87,500 105,000 105,000
200,000 60,000 80,000 100,000 120,000 120,000
225,000 67,500 90,000 112,500 135,000 135,000
250,000 75,000 100,000 125,000 150,000 150,000
300,000 90,000 120,000 150,000 180,000 180,000
400,000 120,000 160,000 200,000 240,000 240,000
450,000 135,000 180,000 225,000 270,000 270,000
</TABLE>
- ------------
(1) The annual retirement benefits shown in the table do not reflect a
deduction for Social Security benefits and there are no other offsets
to benefits.
(2) For the fiscal year of the Retirement Plan beginning on January 1,
1997, the average final compensation for computing benefits under the
Retirement Plan cannot exceed $160,000 (as adjusted for subsequent
years pursuant to Code provisions). Benefits in excess of the
limitation are provided through the SERP.
(3) For the fiscal year of the Retirement Plan beginning on January 1,
1997, the maximum annual benefit payable under the Retirement Plan
cannot exceed $125,000 (as adjusted for subsequent years pursuant to
Code provisions).
(4) The maximum years of service credited for benefit purposes is 30
years.
The following table sets forth the years of credited service and the
average annual earnings (as defined above) determined as of December 31, 1996,
the end of the 1996 plan year, for each of the individuals named in the
Executive Compensation Table.
<TABLE>
<CAPTION>
Years of Average Annual
Credited Earnings
Service
------------ --------------
<S> <C> <C>
Harry P. Doherty . . . . . . . . . . . . . . 30 years $293,500
James R. Coyle . . . . . . . . . . . . . . . 26 years 221,944
John P. Brady . . . . . . . . . . . . . . . . 13 years 93,071
Deborah Pagano . . . . . . . . . . . . . . . 19 years 71,723
Edward J. Klingele . . . . . . . . . . . . . 20 years 73,577
</TABLE>
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<PAGE> 162
401(k) PLAN. The Bank maintains the 401(k) Plan, which is a
tax-qualified defined contribution plan which permits salaried employees with
at least one year of service to make pre-tax salary deferrals under section
401(k) of the Code. Salary deferrals are made by the election and are limited
to 15% of compensation up to $9,500 (for 1997). The Bank generally makes
matching contributions equal to 100% of deferred amounts up to 6% of salary,
with an annual limit of $3,000. Employees are fully vested in their salary
deferrals, and become 20% vested in the Bank's contribution after two years of
employment and an additional 20% vested in each of the next four years of
employment. The 401(k) Plan provides that employees select the investment of
their accounts among several options.
The Bank has amended the 401(k) Plan in connection with the Conversion
to provide for option to invest 401(k) Plan assets in Common Stock. In
addition, participating employees may elect to invest all or any part of their
401(k) Plan account balances in Common Stock. Common Stock held by the 401(k)
Plan may be newly issued or treasury shares acquired from the Company or
outstanding shares purchased on the open market or in privately negotiated
transactions. All Common Stock held by the 401(k) Plan will be held by an
independent trustee and allocated to the accounts of individual participants.
Participants will control the exercise of voting and tender rights relating to
the Common Stock held in their accounts.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN. The Bank has adopted the SERP
to provide for eligible employees benefits that would be due under its
Retirement Plan and 401(k) Plan if such benefits were not limited under the
Code. SERP benefits provided with respect to the Retirement Plan are reflected
in the pension table. The Board of Trustees of the Bank intends to adopt an
amendment to the SERP to provide eligible employees with benefits that would be
due under the ESOP if such benefits were not limited under the Code.
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<PAGE> 163
PROPOSED MANAGEMENT PURCHASES
The following table sets forth, for each of the Company's directors
and executive officers and for all of the directors and executive officers as a
group, the proposed purchases of Common Stock, assuming sufficient shares are
available to satisfy their subscriptions. The amounts include shares that may
be purchased through individual retirement accounts.
<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES AMOUNT PERCENT(1)
-------------------------------------- ------------ ------------ ----------------
<S> <C>
Harold Banks
Charles J. Bartels
James R. Coyle
Harry P. Doherty
William G. Horn
Dennis P. Kelleher
Julius Mehrberg
John R. Morris
Kenneth W. Nelson
William E. O'Mara
All directors and executive officers
as a group (15 persons)
</TABLE>
- ------------------
* Less than 0.01%.
(1) Based upon the midpoint of the Estimated Valuation Range.
In addition, the ESOP currently intends to purchase 8% of the Common
Stock issued in the Conversion for the benefit of officers and employees.
Stock options and stock grants may also be granted in the future to directors,
officers and employees upon the receipt of stockholder approval of the
Company's proposed stock benefit plans. See "Management - Management of the
Bank - Benefits" for a description of these plans.
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<PAGE> 164
THE CONVERSION
THE BOARD OF DIRECTORS OF THE COMPANY AND THE BOARD OF TRUSTEES OF THE
BANK HAVE APPROVED THE PLAN OF CONVERSION, AS HAS THE OTS, SUBJECT TO APPROVAL
BY THE MEMBERS OF THE BANK ENTITLED TO VOTE ON THE MATTER AND THE SATISFACTION
OF CERTAIN OTHER CONDITIONS. SUCH OTS APPROVAL, HOWEVER, DOES NOT CONSTITUTE
A RECOMMENDATION OR ENDORSEMENT OF THE PLAN BY SUCH AGENCY.
GENERAL
On April 16, 1997, the Board of Trustees of the Bank unanimously
adopted the Plan, pursuant to which the Bank will be converted from a
federally-chartered mutual savings bank to a federally-chartered stock savings
bank and the Company will offer and sell the Common Stock. It is intended that
all of the common stock of the Bank following the Conversion will be held by
the Company, which is incorporated under Delaware law. The Plan has been
approved by the OTS, subject to, among other things, approval of the Plan by
the members of the Bank. A Special Meeting has been called for this purpose to
be held on ______, 1997.
In adopting the Plan, the Board of Directors of the Bank determined
that the Conversion was advisable and in the best interests of its members and
the Bank and further determined that the interests of certain holders of its
deposit accounts in the net worth of the Bank would be equitably provided for
and that the Conversion would not have any adverse impact on the reserves and
net worth of the Bank.
The Company has received approval from the OTS to become a savings and
loan holding company and to acquire all of the common stock of the Bank to be
issued in connection with the Conversion. The Company plans to retain 50% of
the net proceeds from the sale of the Common Stock, with all the remaining
proceeds used to purchase all of the then to be issued and outstanding capital
stock of the Bank. Based on the minimum and maximum of the Estimated Valuation
Range, approximately $21.0 million and $28.5 million, respectively, of the net
proceeds retained by the Company are intended to be used to loan funds to the
ESOP to enable the ESOP to purchase up to 8% of the Common Stock. The
Conversion will be effected only upon completion of the sale of all of the
shares of Common Stock to be issued pursuant to the Plan.
The Plan provides generally that, in connection with the Conversion,
the Company will offer shares of Common Stock for sale in the Subscription
Offering to the Bank's Eligible Account Holders, ESOP, Supplemental Eligible
Account Holders, Other Members, officers, directors and employees of the Bank.
Any shares remaining upon completion of the Subscription Offering are expected
to be offered in a Community Offering to certain members of the general public,
subject to the prior rights of holders of subscription rights. See "-
Subscription Offering and Subscription Rights" and "- Community Offering." It
is
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<PAGE> 165
anticipated that all shares not subscribed for in the Subscription and
Community Offerings will be offered for sale by the Company to the general
public in a Syndicated Community Offering. See "- Syndicated Community
Offering." The Company and the Bank will have the right to accept or reject,
in whole or in part, any orders to purchase shares of Common Stock received in
the Community Offering or in the Syndicated Community Offering.
The aggregate price of the shares of Common Stock to be issued in the
Conversion within the Estimated Valuation Range, currently estimated to be
between $263.1 million and $356.0 million, will be determined based upon an
independent appraisal of the estimated pro forma market value of the Common
Stock. All shares of Common Stock to be issued and sold in the Conversion will
be sold at the same price. The independent appraisal will be affirmed or, if
necessary, updated at the completion of the Subscription Offering, if all
shares are subscribed for, or at the completion of the Community Offering
and/or Syndicated Community Offering. The appraisal has been performed by RP
Financial, a consulting firm experienced in the valuation and appraisal of
savings institutions. See "- Stock Pricing and Number of Shares to be Issued"
for more information as to the determination of the estimated pro forma market
value of the Common Stock.
In furtherance of the Bank's commitment to the community which it
serves, the Plan provides for the establishment of the Foundation as part of
the Conversion. As is described in greater detail in the following section,
the Foundation is intended to complement the Bank's existing community
reinvestment activity and is a means of establishing a common bond between the
Bank and the communities that it serves and thereby enable such communities to
share in the growth and profitability of the Company over the long term.
Consistent with the Bank's goal, the Company intends to donate to the
Foundation immediately following the Conversion a number of shares of its
authorized, but unissued Common Stock, in an amount equal to 5% of the number
of shares of Common Stock issued in the Conversion.
The following is a brief summary of pertinent aspects of the
Conversion. The summary is qualified in its entirety by reference to the
provisions of the Plan. A copy of the Plan is available for inspection at the
offices of the Bank and at the offices of the OTS. The Plan is also filed as
an exhibit to the Registration Statement of which this Prospectus is a part,
copies of which may be obtained from the SEC. See "Additional Information."
ESTABLISHMENT OF THE FOUNDATION
GENERAL. In furtherance of the Bank's commitment to the communities
that it serves, the Plan provides that the Bank and the Company will establish
the Foundation, which will be incorporated under Delaware law as a non-stock
corporation, and will fund the Foundation with Common Stock of the Company. By
further enhancing the Bank's visibility and reputation in the communities that
it serves, the Bank believes that the Foundation will enhance the long-term
value of the Bank's community banking franchise. The Foundation
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<PAGE> 166
will be dedicated to charitable purposes within the communities served by the
Bank, including community development activities.
PURPOSE OF THE FOUNDATION. The purpose of the Foundation is to
provide funding to support charitable causes and community development
activities. In recent years, the Bank has emphasized community lending and
community development activities within the communities that it serves. The
Foundation is being formed as a complement to the Bank's existing community
activities, not as a replacement for such activities. While the Bank intends
to continue to emphasize community lending and community development activities
following the Conversion, such activities are not the Bank's sole corporate
purpose. The Foundation, conversely, will be completely dedicated to community
activities and the promotion of charitable causes, and may be able to support
such activities in ways that are not currently available to the Bank. The Bank
believes that the Foundation will enable the Company and the Bank to assist
their local community in areas beyond community development and lending. The
Bank believes the establishment of the Foundation will enhance its current
activities under the CRA. In this regard, the Board of Directors believes the
establishment of a charitable foundation is consistent with the Bank's
commitment to community service. The Board further believes that the funding
of the Foundation with Common Stock of the Company is a means of enabling the
communities served by the Bank to share in the growth and success of the
Company long after completion of the Conversion. The Foundation will
accomplish that goal by providing for continued ties between the Foundation and
Bank, thereby forming a partnership with the Bank's community. The
establishment of the Foundation will also enable the Company and the Bank to
develop a unified charitable donation strategy and will centralize the
responsibility for administration and allocation of corporate charitable funds.
Charitable foundations have been formed by other financial institutions for
this purpose, among others. The Bank, however, does not expect the
contribution to the Foundation to take the place of the Bank's traditional
community lending activities.
STRUCTURE OF THE FOUNDATION. The Foundation will be incorporated
under Delaware law as a non-stock corporation. Pursuant to the Foundation's
Bylaws, the Foundation's initial Board of Directors will be comprised of
members of the Company's Board of Directors and certain other individuals
chosen in light of their commitment and service to charitable and community
purposes. A Nominating Committee of the Foundation's Board will nominate
individuals eligible for election to the Board of Directors. The members of
the Foundation, who are comprised of its Board members, will elect the
directors at the annual meeting of the Foundation from those nominated by the
Nominating Committee. Only persons serving as directors of the Foundation
qualify as members of the Foundation, with voting authority. Directors will be
divided into three classes with each class appointed for three-year terms. The
certificate of incorporation of the Foundation provides that the corporation is
organized exclusively for charitable purposes, including community development,
as set forth in Section 501(c)(3) of the Code. The Foundation's certificate of
incorporation further provides that no part of the net earnings of the
Foundation will inure to the benefit of, or be distributable to its directors,
officers or members.
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<PAGE> 167
The authority for the affairs of the Foundation will be vested in the
Board of Directors of the Foundation. The Directors of the Foundation will be
responsible for establishing the policies of the Foundation will respect to
grants or donations by the Foundation, consistent with the purposes for which
the Foundation was established. Although no formal policy governing Foundation
grants exists at this time, the Foundation's Board of Directors will adopt such
a policy upon establishment of the Foundation. As directors of a nonprofit
corporation, directors of the Foundation will at all times be bound by their
fiduciary duty to advance the Foundation's charitable goals, to protect the
assets of the Foundation and to act in a manner consistent with the charitable
purpose for which the Foundation is established. The Directors of the
Foundation will also be responsible for directing the activities of the
Foundation, including the management of the Common Stock of the Company held by
the Foundation. However, it is expected that as a condition to receiving the
approval of the OTS to the Bank's Conversion, that the Foundation will be
required to commit to the OTS that all shares of Common Stock held by the
Foundation will be voted in the same ratio as all other shares of the Company's
Common Stock on all proposals considered by stockholders of the Company;
provided, however, that, consistent with the such expected condition, the OTS
would waive this voting restriction under certain circumstances if compliance
with the voting restriction would: (i) cause a violation of the law of the
State of Delaware and the OTS determines that federal law would not preempt the
application of the laws of Delaware to the Foundation; (ii) would cause the
Foundation to lose its tax-exempt status, or cause the Internal Revenue Service
to deny the Foundation's request for a determination that it is an exempt
organization or otherwise have a material and adverse tax consequence on the
Foundation; or (iii) would cause the Foundation to be subject to an excise tax
under Section 4941 of the Code. In order for the OTS to waive such voting
restriction, the Company's or the Foundation's legal counsel would be required
to render an opinion satisfactory to the OTS that compliance with the voting
requirement would have the effect described in clauses (i), (ii) or (iii)
above. Under those circumstances, the OTS would grant a waiver of the voting
restriction upon submission of such legal opinions(s) by the Company or the
Foundation that are satisfactory to the OTS. In the event that the OTS were to
waive the voting requirement, the directors would direct the voting of the
Common Stock held by the Foundation.
The Foundation's place of business will be located at the Bank's
administrative offices and initially the Foundation is expected to have no
employees but will utilize the members of the staff of the Company or the Bank.
The Board of Directors of the Foundation will appoint such officers as may be
necessary to manage the operations of the Foundation. In this regard, it is
expected that the Bank will be required to provide the OTS with a commitment
that, to the extent applicable, the Bank will comply with the affiliate
restrictions set forth in Sections 23A and 23B of the Federal Reserve Act with
respect to any transactions between the Bank and the Foundation.
The Company intends to capitalize the Foundation with Common Stock of
the Company in an amount equal to 5.0% of the total amount of the Common Stock
to be sold in connection with the Conversion. At the minimum, midpoint and
maximum of the
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<PAGE> 168
Estimated Price Range, the contribution to the Foundation would equal
1,315,476, 1,547,619 and 1,779,762 shares, which would have a market value of
$13.2 million, $15.5 million and $17.8 million, respectively, based on the
Purchase Price of $10.00 per share. The Company and the Bank determined to
fund the Foundation with Common Stock rather than cash because it desired to
form a bond with the communities it serves in a manner that would allow them to
share in the growth and success of the Company and the Bank over the long term.
The funding of the Foundation with stock also provides the Foundation with a
potentially larger endowment than if the Company contributed cash to the
Foundation since, as a stockholder, the Foundation will share in the growth and
success of the Company. As such, the contribution of Common Stock to the
Foundation has the potential to provide a self-sustaining funding mechanism
which reduces the amount of cash that the Company, if it were not making the
stock donation, would have to contribute to the Foundation in future years in
order to maintain a level amount of charitable grants and donations.
The Foundation will receive working capital from any dividends that
may be paid on the Common Stock in the future, and subject to applicable
federal and state laws, loans collateralized by the Common Stock or from the
proceeds of the sale of any of the Common Stock in the open market from time to
time as may be permitted to provide the Foundation with additional liquidity.
As a private foundation under Section 501(c)(3) of the Code, the Foundation
will be required to distribute annually in grants or donations, a minimum of 5%
of the average fair market value of its net investment assets. One of the
conditions imposed on the gift of Common Stock by the Company is that the
amount of Common Stock that may be sold by the Foundation in any one year shall
not exceed 5% of the average market value of the assets held by the Foundation,
except where the Board of Directors of the Foundation determines that the
failure to sell an amount of common stock greater than such amount would result
in a longer-term reduction of the value of the Foundation's assets and as such
would jeopardize the Foundation's capacity to carry out its charitable
purposes. Upon completion of the Conversion and the contribution of shares to
the Foundation immediately following the Conversion, the Company would have
27,625,000, 32,500,000 and 37,375,000 shares issued and outstanding at the
minimum, midpoint and maximum of the Estimated Price Range. Because the
Company will have an increased number of shares outstanding, the voting and
ownership interests of shareholders in the Company's Common Stock would be
diluted by 4.8%, as compared to their interests in the Company if the
Foundation was not established. For additional discussion of the dilutive
effect, see "Pro Forma Data."
TAX CONSIDERATIONS. The Company and the Bank have been advised by
their independent tax advisors that an organization created and operated for
the above charitable purposes would generally qualify as a Section 501(c)(3)
exempt organization under the Code, and further that such an organization would
likely be classified as a private foundation. This opinion presumes that the
Foundation will submit a timely request to the IRS to be recognized as an
exempt organization. As long as the Foundation files its application for
recognition of tax-exempt status within 15 months from the date of its
organization, and provided the IRS approves the application, the effective date
of the
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Foundation's status as a Section 501(c)(3) organization will be the date of its
organization. The Company's and the Bank's independent tax advisor, however,
has not rendered any advice on the condition to the contribution to be agreed
to by the Foundation which requires that all shares of Common Stock of the
Company held by the Foundation must be voted in the same ratio as all other
outstanding shares of Common Stock of the Company on all proposals considered
by stockholders of the Company. Consistent with the expected condition, in the
event that the Company or the Foundation receives an opinion of its legal
counsel that compliance with this voting restriction would have the effect of
causing the Foundation to lose its tax-exempt status or otherwise have a
material and adverse tax consequence on the Foundation, or subject the
Foundation to an excise tax under Section 4941 of the Code, it is expected that
the OTS would waive such voting restriction upon submission of a legal
opinion(s) by the Company or the Foundation satisfactory to the FDIC. See
"--Regulatory Conditions Imposed on the Foundation."
Under Delaware law, the Company is authorized by statute to make
charitable contributions and case law has recognized the benefits of such
contributions to a Delaware corporation. In this regard, Delaware case law
provides that a charitable gift must be within reasonable limits as to amount
and purpose to be valid. Under the Code, the Company is generally allowed a
deduction for charitable contributions made to qualifying donees within the
taxable year of up to 10% of its taxable income (with certain modifications)
for such year. Charitable contributions made by the Company in excess of the
annual deductible amount will be deductible over each of the five succeeding
taxable years, subject to certain limitations. The Company and the Bank
believe that the Conversion presents a unique opportunity to establish and fund
a charitable foundation given the substantial amount of additional capital
being raised in the Conversion. In making such a determination, the Company
and the Bank considered the dilutive impact of the contribution of Common Stock
to the Foundation on the amount of Common Stock available to be offered for
sale in the Conversion. Based on such consideration, the Company and Bank
believe that the contribution to the Foundation in excess of the 10% annual
deduction limitation is justified given the Bank's capital position and its
earnings, the substantial additional capital being raised in the Conversion and
the potential benefits of the Foundation to the communities served by the Bank.
In this regard, assuming the sale of the Common Stock at the midpoint of the
Estimated Price Range, the Company would have pro forma stockholders' equity of
$450.7 million or 21.2% of pro forma consolidated assets and the Bank's pro
forma tangible, core and total risk-based capital ratios would be 14.0%, 15.0%
and 31.4%, respectively. See "Regulatory Capital Compliance,"
"Capitalization," and "Comparison of Valuation and Pro Forma Information with
No Foundation." Thus, the amount of the contribution will not adversely impact
the financial condition of the Company and the Bank and the Company and the
Bank therefore believe that the amount of the charitable contribution is
reasonable given the Company's and the Bank's pro forma capital positions. As
such, the Company and the Bank believe that the contribution does not raise
safety and soundness concerns.
The Company and the Bank have received an opinion of their independent
tax advisors that the Company's contribution of its own stock to the Foundation
would not
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constitute an act of self-dealing, and that the Company will be entitled to a
deduction in the amount of the fair market value of the stock at the time of
the contribution, subject to the annual deduction limitation described above.
The Company, however, would be able to carry forward any unused portion of the
deduction for five years following the contribution, subject to certain
limitations. The Company's and the Bank's independent tax advisor, however,
has not rendered advice as to fair market value for purposes of determining the
amount of the tax deduction. If the Foundation would have been established in
1996, the Company would have received a tax benefit of approximately $8.4
million (based on the Bank's pre-tax income for 1996, an assumed marginal tax
rate of 47% and a deduction for the contribution of Common Stock equal to $17.8
million). The Company is permitted under the Code to carry over the excess
contribution over the five-year period following the contribution to the
Foundation. Assuming the close of the Offering at the midpoint of the
Estimated Price Range, the Company estimates that all of the deduction should
be deductible over the six-year period. Neither the Company nor the Bank
expect to make any further contributions to the Foundation within the first
five years following the initial contribution. After that time, the Company
and the Bank may consider future contributions to the Foundation. Any such
decisions would be based on an assessment of, among other factors, the
financial condition of the Company and the Bank at that time, the interests of
shareholders and depositors of the Company and the Bank, and the financial
condition and operations of the Foundation.
Although the Company and the Bank have received an opinion of their
independent tax advisors that the Company is entitled to a deduction for the
charitable contribution, there can be no assurances that the IRS will recognize
the Foundation as a Section 501(c)(3) exempt organization or that a deduction
for the charitable contribution will be allowed. In such event, the Company's
tax benefit related to the contribution to the Foundation would be expensed
without tax benefit, resulting in a reduction in earnings in the year in which
the IRS makes such a determination. See "Risk Factors-Establishment of the
Foundation."
As a private foundation, earnings and gains, if any, from the sale of
Common Stock or other assets are generally exempt from federal and state
corporate income taxation. However, investment income, such as interest,
dividends and capital gains, of a private foundation will generally be subject
to a federal excise tax of 2.0%. The Foundation will be required to make an
annual filing with the IRS within four and one-half months after the close of
the Foundation's fiscal year to maintain its tax-exempt status. The Foundation
will be required to publish a notice that the annual information return will be
available for public inspection for a period of 180 days after the date of such
public notice. The information return for a private foundation must include,
among other things, an itemized list of all grants made or approved, showing
the amount of each grant, the recipient, any relationship between a grant
recipient and the Foundation's managers and a concise statement of the purpose
of each grant. The Foundation will also be required to file an annual report
with the Charities Bureau of the Office of the Attorney General of the State of
New York.
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REGULATORY CONDITIONS IMPOSED ON THE FOUNDATION. Establishment of the
Foundation is expected to be subject to the following conditions being agreed
to by the Foundation in writing as a condition to receiving the OTS' approval
of the Conversion: (i) the Foundation will be subject to examination by the
OTS; (ii) the Foundation must comply with supervisory directives imposed by the
OTS; (iii) the Foundation will operate in accordance with written policies
adopted by the Board of Directors, including a conflict of interest policy; and
(iv) any shares of Common Stock held by the Foundation must be voted in the
same ratio as all other outstanding shares of Common Stock all proposals
considered by stockholders of the Company; provided, however, that, consistent
with the condition, the OTS would waive this voting restriction under certain
circumstances if compliance with the voting restriction would: (a) cause a
violation of the law of the State of Delaware and the OTS determines that
federal law would not preempt the application of the laws of Delaware to the
Foundation; (b) would cause the Foundation to lose its tax-exempt status or
otherwise have a material and adverse tax consequence on the Foundation; or (c)
would cause the Foundation to be subject to an excise tax under Section 4941 of
the Code. In order for the OTS to waive such voting restriction, the Company's
or the Foundation's legal counsel would be required to render an opinion
satisfactory to the OTS. There can be no assurances that a legal opinion
addressing these issues could be rendered, or if rendered, that the OTS would
grant an unconditional waiver of the voting restriction. In no event would the
voting restriction survive the sale of shares of the Common Stock held by the
Foundation.
PURPOSES OF CONVERSION
The Bank, as a federally-chartered mutual savings bank, does not have
stockholders and has no authority to issue capital stock. By converting to the
capital stock form of organization, the Bank will be structured in the form
used by commercial banks, most business entities and a growing number of
savings institutions. The Conversion will result in an increase in the capital
base of the Bank and the Company, which will support the operations of the Bank
and Company.
The Conversion will permit the Bank's customers and members of the
local community and of the general public to become equity owners and to share
in the future of the Company and the Bank. The Conversion will also provide
additional funds for lending and investment activities, facilitate future
access to the capital markets, enhance the ability of the Company to diversify
and expand into other markets and enable the Bank to compete more effectively
with other financial institutions.
The holding company form of organization will provide additional
flexibility to diversify the Company's and the Bank's business activities
through existing or newly formed subsidiaries, or through acquisition of or
mergers with other financial institutions, as well as other companies.
Although there are no current arrangements, understandings or agreements
regarding any such opportunities, the Company will be in a position after the
Conversion, subject to regulatory limitations and the Company's financial
position, to take advantage of any such opportunities that may arise.
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After completion of the Conversion, the unissued common and preferred
stock authorized by the Company's Certificate of Incorporation will permit the
Company, subject to market conditions and applicable regulatory approvals, to
raise additional equity capital through further sales of securities, and to
issue securities in connection with possible acquisitions. At the present
time, the Company has no plans with respect to additional offerings of
securities, other than the possible issuance of additional shares to the
Recognition Plan or upon exercise of stock options. Following the Conversion,
the Company will also be able to use stock-related incentive programs to
attract and retain executive and other personnel for itself and its
subsidiaries. See "Management - Benefits."
EFFECTS OF CONVERSION
GENERAL. Prior to the Conversion, each depositor in the Bank has both
a deposit account in the institution and a pro rata ownership interest in the
net worth of the Bank based upon the balance in his account, which interest may
only be realized in the event of a liquidation of the Bank. However, this
ownership interest is tied to the depositor's account and has no tangible
market value separate from such deposit account. Any person who opens a
deposit account obtains a pro rata ownership interest in the net worth of the
Bank without any additional payment beyond the amount of the deposit. A
depositor who reduces or closes his account receives a portion or all of the
balance in the account but nothing for his ownership interest in the net worth
of the Bank, which is lost to the extent that the balance in the account is
reduced.
Consequently, the depositors of the Bank normally have no way to
realize the value of their ownership interest, which has realizable value only
in the unlikely event that the Bank is liquidated. In such event, the
depositors of record at that time, as owners, would share pro rata in any
residual surplus and reserves of the Bank after other claims, including claims
of depositors to the amount of their deposits, are paid.
When the Bank converts to stock form, permanent nonwithdrawable
capital stock will be created to represent the ownership of the net worth of
the Bank, and the Bank will become a wholly owned subsidiary of the Company.
THE COMMON STOCK OF THE BANK AND THE COMPANY IS SEPARATE AND APART FROM DEPOSIT
ACCOUNTS OF THE BANK AND CANNOT BE AND IS NOT INSURED BY THE FDIC OR ANY OTHER
GOVERNMENTAL AGENCY. Certificates are issued to evidence ownership of the
permanent stock of the Bank and the Company. The stock certificates are
transferable, and therefore the stock may be sold or traded if a purchaser is
available with no effect on any account the seller may hold in the Bank.
CONTINUITY. While the Conversion is being accomplished, the normal
business of the Bank of accepting deposits and making loans will continue
without interruption. The Bank will continue to be subject to regulation by
the OTS and the FDIC. After the Conversion, the Bank will continue to provide
services for depositors and borrowers under current policies by its present
management and staff.
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The directors and officers of the Bank at the time of the Conversion
will continue to serve as directors and officers of the Bank after the
Conversion. The directors and officers of the Company consist of individuals
currently serving as directors and officers of the Bank, and they will retain
their positions in the Bank after the Conversion.
EFFECT ON DEPOSIT ACCOUNTS. Under the Plan, each depositor in the
Bank at the time of the Conversion will automatically continue as a depositor
after the Conversion, and each such deposit account will remain the same with
respect to deposit balance, interest rate and other terms, except to the extent
that funds in the account are withdrawn to purchase the Common Stock and except
with respect to voting and liquidation rights. Each such account will be
insured by the FDIC to the same extent as before the Conversion. Depositors
will continue to hold their existing certificates, passbooks and other
evidences of their accounts.
EFFECT ON LOANS. No loan outstanding from the Bank will be affected
by the Conversion, and the amount, interest rate, maturity and security for
each loan will remain as they were contractually fixed prior to the Conversion.
EFFECT ON VOTING RIGHTS OF MEMBERS. At present, all depositors and
certain borrowers of the Bank are members of, and have voting rights in, the
Bank as to all matters requiring membership action. Upon completion of the
Conversion, depositors and borrowers will cease to be members and will no
longer be entitled to vote at meetings of the Bank. Upon completion of the
Conversion, all voting rights in the Bank will be vested in the Company as the
sole stockholder of the Bank. Exclusive voting rights with respect to the
Company will be vested in the holders of Common Stock. Depositors of and
borrowers from the Bank will not have voting rights in the Company after the
Conversion, except to the extent that they become stockholders of the Company.
TAX EFFECTS. Consummation of the Conversion is conditioned on prior
receipt by the Company and the Bank of rulings or opinions with regard to
federal and New York income taxation which indicate that the adoption and
implementation of the Plan of Conversion described herein will not be taxable
for federal or New York income tax purposes to the Company and the Bank or the
Bank's Eligible Account Holders or Supplemental Eligible Account Holders,
except as discussed below. The Bank has received favorable opinions regarding
the federal and New York income tax consequences of the Conversion. See "- Tax
Aspects."
EFFECT ON LIQUIDATION RIGHTS. Were the Bank to liquidate, all claims
of the Bank's creditors (including those of depositors, to the extent of their
deposit balances) would be paid first. Thereafter, if there were any assets
remaining, members of the Bank would receive such remaining assets, pro rata,
based upon the deposit balances in their deposit accounts at the Bank
immediately prior to liquidation. In the unlikely event that the Bank were to
liquidate after the Conversion, all claims of creditors (including those of
depositors, to the extent of their deposit balances) would also be paid first,
followed by distribution of the "liquidation account" to certain depositors
(see "- Liquidation Rights"), with any assets
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remaining thereafter distributed to the Company as the holder of the Bank's
capital stock. Pursuant to the rules and regulations of the OTS, a
post-Conversion merger, consolidation, sale of bulk assets or similar
combination or transaction with another insured savings institution would not
be considered a liquidation and, in such a transaction, the liquidation account
would be required to be assumed by the surviving institution.
STOCK PRICING AND NUMBER OF SHARES TO BE ISSUED
The Plan of Conversion requires that the purchase price of the Common
Stock must be based on the appraised pro forma market value of the Common
Stock, as determined on the basis of an independent valuation. The Bank has
retained RP Financial to make such valuation. For its services in making such
appraisal, RP Financial's fees and out-of-pocket expenses are estimated to be
$80,000. The Bank has agreed to indemnify RP Financial and any employees of RP
Financial who act for or on behalf of RP Financial in connection with the
appraisal against any and all loss, cost, damage, claim, liability or expense
of any kind (including claims under federal and state securities laws) arising
out of any misstatement or untrue statement of a material fact or an omission
to state a material fact in the information supplied by the Bank to RP
Financial, unless RP Financial is determined to be negligent or otherwise at
fault.
An appraisal has been made by RP Financial in reliance upon the
information contained in this Prospectus, including the Financial Statements.
RP Financial also considered the following factors, among others: the present
and projected operating results and financial condition of the Company and the
Bank and the economic and demographic conditions in the Bank's existing
marketing area; certain historical, financial and other information relating to
the Bank; a comparative evaluation of the operating and financial statistics of
the Bank with those of other similarly situated publicly traded savings
institutions located in New York and New Jersey; the aggregate size of the
offering of the Common Stock; the impact of the Conversion on the Bank's net
worth and earnings potential; the proposed dividend policy of the Company and
the Bank; and the trading market for securities of comparable institutions and
general conditions in the market for such securities. In its review of the
appraisal provided by RP Financial, the Board of Directors reviewed the
methodologies and the appropriateness of the assumptions used by RP Financial
in addition to the factors enumerated above, and the Board of Directors
believes that such assumptions were reasonable.
On the basis of the foregoing, RP Financial has advised the Company
and the Bank that in its opinion, dated July 17, 1997, the estimated pro forma
market value of the Common Stock ranged from a minimum of $263.1 million to a
maximum of $356.0 million with a midpoint of $309.5 million. The Boards of
Directors of the Company and the Bank determined that the Common Stock should
be sold at $10.00 per share, resulting in a range of 26,309,524 to 35,595,238
shares of Common Stock being offered. The Estimated Valuation Range may be
amended with the approval of the OTS, if required, or if necessitated by
subsequent developments in the financial condition of the Company and the
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Bank or market conditions generally, or to fill the order of the ESOP. In the
event the Estimated Valuation Range is updated to amend the value of the Bank
below $263.1 million or above $409.3 million (the maximum of the Estimated
Valuation Range, as adjusted by 15%), the new appraisal will be filed with the
SEC by post-effective amendment.
Based upon current market and financial conditions and recent
practices and policies of the OTS, in the event the Company receives orders for
Common Stock in excess of $356.0 million (the maximum of the Estimated
Valuation Range) and up to $409.3 million (the maximum of the Estimated
Valuation Range, as adjusted by 15%), the Company may be required by the OTS to
accept all such orders. No assurances, however, can be made that the Company
will receive orders for Common Stock in excess of the maximum of the Estimated
Valuation Range or that, if such orders are received, that all such orders will
be accepted because the Company's final valuation and number of shares to be
issued are subject to the receipt of an updated appraisal from RP Financial
which reflects such an increase in the valuation and the approval of such
increase by the OTS. In addition, an increase in the number of shares above
35,595,238 shares will first be used, if necessary, to fill the order of the
ESOP. There is no obligation or understanding on the part of management to
take and/or pay for any shares in order to complete the Conversion.
RP FINANCIAL'S VALUATION IS NOT INTENDED, AND MUST NOT BE CONSTRUED,
AS A RECOMMENDATION OF ANY KIND AS TO THE ADVISABILITY OF PURCHASING SUCH
SHARES. RP FINANCIAL DID NOT INDEPENDENTLY VERIFY THE CONSOLIDATED FINANCIAL
STATEMENTS AND OTHER INFORMATION PROVIDED BY THE BANK, NOR DID RP FINANCIAL
VALUE INDEPENDENTLY THE ASSETS OR LIABILITIES OF THE BANK. THE VALUATION
CONSIDERS THE BANK AS A GOING CONCERN AND SHOULD NOT BE CONSIDERED AS AN
INDICATION OF THE LIQUIDATION VALUE OF THE BANK. MOREOVER, BECAUSE SUCH
VALUATION IS NECESSARILY BASED UPON ESTIMATES AND PROJECTIONS OF A NUMBER OF
MATTERS, ALL OF WHICH ARE SUBJECT TO CHANGE FROM TIME TO TIME, NO ASSURANCE CAN
BE GIVEN THAT PERSONS PURCHASING COMMON STOCK IN THE CONVERSION WILL THEREAFTER
BE ABLE TO SELL SUCH SHARES AT PRICES AT OR ABOVE THE PURCHASE PRICE OR IN THE
RANGE OF THE FOREGOING VALUATION OF THE PRO FORMA MARKET VALUE THEREOF.
Prior to completion of the Conversion, the maximum of the Estimated
Valuation Range may be increased up to 15% and the number of shares of Common
Stock may be increased to up to 40,934,524 shares to reflect changes in market
and financial conditions or to fill the order of the ESOP, without the
resolicitation of subscribers. See "- Limitations on Common Stock Purchases"
as to the method of distribution and allocation of additional shares that may
be issued in the event of an increase in the Estimated Valuation Range to fill
unfilled orders in the Subscription Offering.
No sale of shares of Common Stock in the Conversion may be consummated
unless prior to such consummation RP Financial confirms that nothing of a
material nature has occurred which, taking into account all relevant factors,
would cause it to conclude that the Purchase Price is materially incompatible
with the estimate of the pro forma market value of a share of Common Stock upon
consummation of the Conversion. If such is not the case,
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a new Estimated Valuation Range may be set and a new Subscription and Community
Offering and/or Syndicated Community Offering may be held or such other action
may be taken as the Company and the Bank shall determine and the OTS may permit
or require.
Depending upon market or financial conditions following the
commencement of the Subscription Offering, the total number of shares of Common
Stock may be increased or decreased without a resolicitation of subscribers,
provided that the product of the total number of shares times the Purchase
Price is not below the minimum or more than 15% above the maximum of the
Estimated Valuation Range. In the event market or financial conditions change
so as to cause the aggregate Purchase Price of the shares to be below the
minimum of the Estimated Valuation Range or more than 15% above the maximum of
such range, purchasers will be resolicited (i.e., permitted to continue their
orders, in which case they will need to affirmatively reconfirm their
subscriptions prior to the expiration of the resolicitation offering or their
subscription funds will be promptly refunded with interest at the Bank's
passbook rate of interest, or be permitted to modify or rescind their
subscriptions). Any change in the Estimated Valuation Range must be approved
by the OTS. If the number of shares of Common Stock issued in the Conversion
is increased due to an increase of up to 15% in the Estimated Valuation Range
to reflect changes in market or financial conditions or to fill the order of
the ESOP, persons who subscribed for the maximum number of shares will be given
the opportunity to subscribe for the adjusted maximum number of shares. See "-
Limitations on Common Stock Purchases."
An increase in the number of shares of Common Stock as a result of an
increase in the estimated pro forma market value would decrease both a
subscriber's ownership interest and the Company's pro forma net income and
stockholders' equity on a per share basis while increasing pro forma net income
and stockholders' equity on an aggregate basis. A decrease in the number of
shares of Common Stock would increase both a subscriber's ownership interest
and the Company's pro forma net income and stockholders' equity on a per share
basis while decreasing pro forma net income and stockholders' equity on an
aggregate basis. See "Risk Factors - Possible Increase in Number of Shares
Issued in the Conversion" and "Pro Forma Data."
Copies of the appraisal report of RP Financial, including any
amendments thereto, and the detailed report of the appraiser setting forth the
method and assumptions for such appraisal are available for inspection at the
main office of the Bank and the other locations specified under "Additional
Information."
SUBSCRIPTION OFFERING AND SUBSCRIPTION RIGHTS
In accordance with the Plan of Conversion, rights to subscribe for the
purchase of Common Stock have been granted under the Plan of Conversion to the
following persons in the following order of descending priority: (1) Eligible
Account Holders, (2) the ESOP, (3) Supplemental Eligible Account Holders, (4)
Other Members, and (5) directors, officers and employees of the Bank. All
subscriptions received will be subject to the availability of
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Common Stock after satisfaction of all subscriptions of all persons having
prior rights in the Subscription Offering and to the maximum and minimum
purchase limitations set forth in the Plan of Conversion and as described below
under "- Limitations on Common Stock Purchases."
PRIORITY 1: ELIGIBLE ACCOUNT HOLDERS. Each Eligible Account Holder
will receive, without payment therefor, first priority, nontransferable
subscription rights to subscribe for in the Subscription Offering up to the
greater of (i) $300,000 of Common Stock, (ii) one-tenth of one percent (0.10%)
of the total offering of shares of Common Stock or (iii) 15 times the product
(rounded down to the next whole number) obtained by multiplying the total
number of shares of Common Stock to be issued by a fraction, of which the
numerator is the amount of 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 as of the close of business on March 31,
1996 (the "Eligibility Record Date"), subject to the overall purchase
limitations. See "- Limitations on Common Stock Purchases."
If there are not sufficient shares available to satisfy all
subscriptions, shares first will be allocated among subscribing Eligible
Account Holders so as to permit each such Eligible Account Holder, to the
extent possible, to purchase a number of shares sufficient to make his total
allocation equal to the lesser of the number of shares subscribed for or 100
shares. Thereafter, any shares remaining after each subscribing Eligible
Account Holder has been allocated the lesser of the number of shares subscribed
for or 100 shares will be allocated among the 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, provided that no fractional shares shall be issued. Subscription
Rights of Eligible Account Holders will be subordinated to the priority rights
of Tax-Qualified Employee Stock Benefit Plans to purchase shares in excess of
the maximum of the Estimated Valuation Range.
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 directors or officers of the
Bank or their associates will be subordinated to the subscription rights of
other Eligible Account Holders to the extent attributable to increased deposits
in the year preceding March 31, 1996.
PRIORITY 2: EMPLOYEE STOCK OWNERSHIP PLAN. The ESOP will receive,
without payment therefor, second priority, nontransferable subscription rights
to purchase, in the aggregate, up to 10% of the Common Stock, including any
increase in the number of shares of Common Stock after the date hereof as a
result of an increase of up to 15% in the maximum of the Estimated Valuation
Range. The ESOP intends to purchase 8% of the shares of Common Stock, or
2,104,761 shares and 2,847,619 shares based on the minimum
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and maximum of the Estimated Valuation Range, respectively. Subscriptions by
the ESOP will not be aggregated with shares of Common Stock purchased directly
by or which are otherwise attributable to any other participants in the
Subscription and Community Offerings, including subscriptions of any of the
Bank's directors, officers, employees or associates thereof. In the event that
the total number of shares offered in the Conversion is increased to an amount
greater than the number of shares representing the maximum of the Estimated
Valuation Range ("Maximum Shares"), the ESOP will have a priority right to
purchase any such shares exceeding the Maximum Shares up to an aggregate of 10%
of the Common Stock. See "Management - Benefits - Employee Stock Ownership
Plan."
PRIORITY 3: SUPPLEMENTAL ELIGIBLE ACCOUNT HOLDERS. To the extent that
there are sufficient shares remaining after satisfaction of subscriptions by
Eligible Account Holders and the ESOP, each Supplemental Eligible Account
Holder will receive, without payment therefor, third priority, nontransferable
subscription rights to subscribe for in the Subscription Offering up to the
greater of (i) $300,000 of Common Stock, (ii) one-tenth of one percent (0.10%)
of the total offering of shares of Common Stock or (iii) 15 times the product
(rounded down to the next whole number) obtained by multiplying the total
number of shares of Common Stock to be issued by a fraction, of which the
numerator is the amount of 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
as of the close of business on [JUNE 30,] 1997 (the "Supplemental Eligibility
Record Date"), subject to the overall purchase limitations. See "- Limitations
on Common Stock Purchases."
If there are not sufficient shares available to satisfy all
subscriptions of all Supplemental Eligible Account Holders, available shares
first will be allocated among subscribing Supplemental Eligible Account Holders
so as to permit each such Supplemental Eligible Account Holder, to the extent
possible, to purchase a number of shares sufficient to make his total
allocation equal to the lesser of the number of shares subscribed for or 100
shares. Thereafter, any shares remaining available will be allocated among the
Supplemental 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 Supplemental Eligible
Account Holders whose subscriptions remain unfilled, provided that no
fractional shares shall be issued.
PRIORITY 4: OTHER MEMBERS. To the extent that there are sufficient
shares remaining after satisfaction of subscriptions by Eligible Account
Holders, the ESOP and Supplemental Eligible Account Holders, each Other Member
will receive, without payment therefor, fourth priority, nontransferable
subscription rights to subscribe for Common Stock in the Subscription Offering
up to the greater of (i) $300,000 of Common Stock or (ii) one-tenth of one
percent (0.10%) of the total offering of shares of Common Stock, subject to the
overall purchase limitations. See "- Limitations on Common Stock Purchases."
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In the event the Other Members subscribe for a number of shares which,
when added to the shares subscribed for by Eligible Account Holders, the ESOP
and Supplemental Eligible Account Holders, is in excess of the total number of
shares of Common Stock offered in the Conversion, available shares first will
be allocated so as to permit each subscribing Other Member, to the extent
possible, to purchase a number of shares sufficient to make his total
allocation equal to the lesser of the number of shares subscribed for or 100
shares. Thereafter, any remaining shares will be allocated among such
subscribing Other Members on a pro rata basis in the same proportion as each
Other Member's subscription bears to the total subscriptions of all subscribing
Other Members, provided that no fractional shares shall be issued.
PRIORITY 5: DIRECTORS, OFFICERS AND EMPLOYEES. To the extent that
there are sufficient shares remaining after satisfaction of all subscriptions
by Eligible Account Holders, the ESOP, Supplemental Eligible Account Holders
and Other Members, then directors, officers and employees of the Bank will
receive, without payment therefor, fifth priority, nontransferable subscription
rights to subscribe for, in this category, an aggregate of up to 15% of the
shares of Common Stock offered in the Subscription Offering. The ability of
directors, officers and employees to purchase Common Stock under this category
is in addition to rights which are otherwise available to them under the Plan
as they may fall within higher priority categories, and the Plan generally
allows such persons to purchase in the aggregate up to 25% of Common Stock sold
in the Conversion. See "- Limitations on Common Stock Purchases."
In the event of an oversubscription in this category, subscription
rights will be allocated among the individual directors, officers and employees
on a point system basis, whereby such individuals will receive subscription
rights in the proportion that the number of points assigned to each of them
bears to the total points assigned to all directors, officers and employees,
provided that no fractional shares shall be issued. One point will be assigned
for each year of service with the Bank, one point for each salary increment of
$5,000 per annum and five points for each office presently held in the Bank,
including directorships. For information as to the number of shares proposed
to be purchased by certain of the directors and officers, see "Proposed
Management Purchases."
EXPIRATION DATE FOR THE SUBSCRIPTION OFFERING. The Subscription
Offering will expire at 12:00, noon, Eastern Time, on ________, 1997 (the
"Subscription Expiration Date"), unless extended for up to 45 days or for such
additional periods by the Company and the Bank as may be approved by the OTS.
The Subscription Offering may not be extended beyond ________, 1999.
Subscription rights which have not been exercised prior to the Subscription
Expiration Date (unless extended) will become void.
The Company and the Bank will not execute orders until at least the
minimum number of shares of Common Stock (26,309,524 shares) have been
subscribed for or otherwise sold. If all shares have not been subscribed for
or sold within 45 days after the Subscription Expiration Date, unless such
period is extended with the consent of the OTS,
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all funds delivered to the Bank pursuant to the Subscription Offering will be
returned promptly to the subscribers with interest and all withdrawal
authorizations will be cancelled. If an extension beyond the 45-day period
following the Subscription Expiration Date is granted, the Company and the Bank
will notify subscribers of the extension of time and of any rights of
subscribers to modify or rescind their subscriptions.
COMMUNITY OFFERING
To the extent that shares remain available for purchase after
satisfaction of all subscriptions of Eligible Account Holders, the ESOP,
Supplemental Eligible Account Holders, Other Members and directors, officers
and employees of the Bank, the Company and the Bank anticipate that they will
offer shares pursuant to the Plan to certain members of the general public,
with preference given to natural persons residing in Richmond and Kings
Counties, New York (such natural persons referred to as "Preferred
Subscribers"). Such persons, together with associates of and persons acting in
concert with such persons, may purchase up to the greater of (i) $300,000 or
30,000 shares of Common Stock, or (ii) one-tenth of one percent (0.10%) of the
total offering of shares of Common Stock, subject to the maximum purchase
limitations. See "- Limitations on Common Stock Purchases." THIS AMOUNT MAY
BE INCREASED AT THE SOLE DISCRETION OF THE COMPANY AND THE BANK UP TO 5%. THE
OPPORTUNITY TO SUBSCRIBE FOR SHARES OF COMMON STOCK IN ANY COMMUNITY OFFERING
CATEGORY WILL BE SUBJECT TO THE RIGHT OF THE COMPANY AND THE BANK, 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 there are not sufficient shares available to fill the orders of
Preferred Subscribers after completion of the Community Offering, such stock
will be allocated first to each Preferred Subscriber whose order is accepted by
the Company, in an amount equal to the lesser of 100 shares or the number of
shares subscribed for by each such Preferred Subscriber, if possible.
Thereafter, unallocated shares will be allocated among the Preferred
Subscribers whose accepted orders remain unsatisfied on an equal number of
shares basis per order until all orders have been filled or the remaining
shares have been allocated, provided that no fractional shares shall be issued.
Orders for Common Stock in the Community Offering will first be filled to a
maximum of 2% of the total number of shares of Common Stock sold in the
Conversion and thereafter any remaining shares shall be allocated on an equal
number of shares basis per order until all orders have been filled. If there
are any shares remaining, shares will be allocated to other members of the
general public who subscribe in the Community Offering applying the same
allocation described above for Preferred Subscribers.
SYNDICATED COMMUNITY OFFERING
As a final step in the Conversion, the Plan provides that, if
feasible, all shares of Common Stock not purchased in the Subscription and
Community Offerings may be offered for sale to the general public in a
Syndicated Community Offering through a syndicate of
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registered broker-dealers to be formed. The Company and the Bank expect to
market any shares which remain unsubscribed after the Subscription and
Community Offerings through a Syndicated Community Offering. The Company and
the Bank have the right to reject orders in whole or part in their sole
discretion in the Syndicated Community Offering. Neither Keefe, Bruyette nor
any registered broker-dealer shall have any obligation to take or purchase any
shares of Common Stock in the Syndicated Community Offering; however, Keefe,
Bruyette has agreed to use its best efforts in the sale of shares in the
Syndicated Community Offering.
The price at which Common Stock is sold in the Syndicated Community
Offering will be the same price at which shares are offered and sold in the
Subscription and Community Offerings. No person will be permitted to subscribe
in the Syndicated Community Offering for more than $300,000 or 30,000 shares of
Common Stock, subject to the maximum purchase limitations. See "- Limitations
on Common Stock Purchases." This amount may be increased to up to 5% of the
total offering of shares in the Subscription Offering, provided that orders for
Common Stock in the Syndicated Community Offering will first be filled to a
maximum of 2% of the total number of shares of Common Stock sold in the
Conversion. Thereafter, any remaining shares will be allocated on an equal
number of shares basis per order until all orders have been filled.
Keefe, Bruyette may enter into agreements with broker-dealers
("Selected Dealers") to assist in the sale of the shares in the Syndicated
Community Offering, although no such agreements exist as of the date of this
Prospectus. No orders may be placed or filled by or for a Selected Dealer
during the Subscription Offering. After the close of the Subscription
Offering, Keefe, Bruyette will instruct Selected Dealers as to the number of
shares to be allocated to each Selected Dealer. Only after the close of the
Subscription Offering and upon allocation of shares to Selected Dealers may
Selected Dealers take orders from their customers. During the Subscription and
Community Offerings, Selected Dealers may only solicit indications of interest
from their customers to place orders with the Company as of a certain date
("Order Date") for the purchase of shares of Common Stock. When and if Keefe,
Bruyette and the Company believe that enough indications of interest and orders
have not been received in the Subscription and Community Offerings to
consummate the Conversion, Keefe, Bruyette will request, as of the Order Date,
Selected Dealers to submit orders to purchase shares for which they have
previously received indications of interest from their customers. Selected
Dealers will send confirmations of the orders to such customers on the next
business day after the Order Date. Selected Dealers will debit the accounts of
their customers on the "Settlement Date" which date will be three business days
from the Order Date. Customers who authorize Selected Dealers to debit their
brokerage accounts are required to have the funds for payment in their account
on but not before the Settlement Date. On the Settlement Date, Selected
Dealers will remit funds to the account established by the Bank for each
Selected Dealer. Each customer's funds so forwarded to the Bank, along with
all other accounts held in the same title, will be insured by the FDIC up to
$100,000 in accordance with applicable FDIC regulations. After payment has
been received by the Bank from Selected Dealers, funds will earn interest at
the Bank's passbook
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rate until the consummation or termination of the Conversion. Funds will be
promptly returned, with interest, in the event the Conversion is not
consummated as described above.
The Syndicated Community Offering will terminate no more than 45 days
following the Subscription Expiration Date, unless extended by the Company and
the Bank with the approval of the OTS. See "- Stock Pricing and Number of
Shares to be Issued" above for a discussion of rights of subscribers, if any,
in the event an extension is granted.
PERSONS IN NONQUALIFIED STATES OR FOREIGN COUNTRIES
The Company and the Bank will make reasonable efforts to comply with
the securities laws of all states in the United States in which persons
entitled to subscribe for stock pursuant to the Plan reside. However, the
Company and the Bank are not required to offer stock in the Subscription
Offering to any person who resides in a foreign country or resides in a state
of the United States with respect to which: (a) the number of persons
otherwise eligible to subscribe for shares under the Plan who reside in such
jurisdiction is small; (b) the granting of subscription rights or the offer or
sale of shares of Common Stock to such persons would require any of the Company
and the Bank or their officers, directors or employees, under the laws of such
jurisdiction, to register as a broker, dealer, salesman or selling agent or to
register or otherwise qualify its securities for sale in such jurisdiction or
to qualify as a foreign corporation or file a consent to service of process in
such jurisdiction; and (c) such registration, qualification or filing in the
judgment of the Company and the Bank would be impracticable or unduly
burdensome for reasons of costs or otherwise. Where the number of persons
eligible to subscribe for shares in one state is small, the Company and the
Bank will base their decision as to whether or not to offer the Common Stock in
such state on a number of factors, including but not limited to the size of
accounts 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.
LIMITATIONS ON COMMON STOCK PURCHASES
The Plan includes the following limitations on the number of shares of
Common Stock which may be purchased in the Conversion:
(1) No fewer than 25 shares of Common Stock may be
purchased, to the extent such shares are available;
(2) Each Eligible Account Holder may subscribe for and
purchase in the Subscription Offering up to the greater of (i)
$300,000 or 30,000 shares of Common Stock, (ii) one-tenth of one
percent (0.10%) of the total offering of shares of Common Stock or
(iii) 15 times the product (rounded down to the next whole number)
obtained by multiplying the total number of shares of Common Stock to
be issued by a fraction, of which the numerator is the amount of the
qualifying deposit
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of the Eligible Account Holder and the denominator is the total amount
of qualifying deposits of all Eligible Account Holders, in each case
as of the close of business on the Eligibility Record Date, subject to
the overall limitation in clause (7) below;
(3) The ESOP may purchase in the aggregate up to 10% of
the shares of Common Stock, including any additional shares issued in
the event of an increase in the Estimated Valuation Range; although at
this time it intends to purchase only 8% of such shares;
(4) Each Supplemental Eligible Account Holder may
subscribe for and purchase in the Subscription Offering up to the
greater of (i) $300,000 or 30,000 shares of Common Stock, (ii)
one-tenth of one percent (0.10%) of the total offering of shares of
Common Stock or (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of
Common Stock to be issued by a fraction, of which the numerator is the
amount of the qualifying deposit of the Supplemental Eligible Account
Holder and the denominator is the total amount of qualifying deposits
of all Supplemental Eligible Account Holders, in each case as of the
close of business on the Supplemental Eligibility Record Date, subject
to the overall limitation in clause (7) below;
(5) Each Other Member or any Person purchasing shares of
Common Stock in the Community Offering may subscribe for and purchase
in the Subscription Offering or Community Offering, as the case may
be, up to the greater of (i) $300,000 or 30,000 shares of Common Stock
or (ii) one-tenth of one percent (0.10%) of the total offering of
shares of Common Stock, subject to the overall limitation in clause
(7) below;
(6) Persons purchasing shares of Common Stock in the
Community Offering or Syndicated Community Offering may purchase in
the Community Offering or Syndicated Community Offering up to $300,000
or 30,000 shares of Common Stock, subject to the overall limitation in
clause (7) below;
(7) Except for the ESOP and certain Eligible Account
Holders and Supplemental Eligible Account Holders whose subscription
rights are based upon the amount of their deposits, the maximum number
of shares of Common Stock subscribed for or purchased in all
categories of the Conversion by any person, together with associates
of and groups of persons acting in concert with such persons, shall
not exceed 1.0% of the total number of shares of Common Stock issued
in the Conversion; and
(8) No more than 15% of the total number of shares
offered for sale in the Subscription Offering may be purchased by
directors and officers of the Bank in the fourth priority category in
the Subscription Offering. No more than 25% of the total number of
shares offered for sale in the Conversion may be purchased by
directors
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and officers of the Bank and their associates in the aggregate,
excluding purchases by the ESOP.
Subject to any required regulatory approval and the requirements of
applicable laws and regulations, but without further approval of the members of
the Bank, the individual amount permitted to be subscribed for may be increased
up to a maximum of 5% of the number of shares sold in the Conversion. If such
amount is increased, subscribers for the maximum amount will be, and certain
other large subscribers in the sole discretion of the Company and the Bank may
be, given the opportunity to increase their subscriptions up to the then
applicable limit.
The term "associate" of a person is defined to mean (i) any
corporation or other organization (other than the Company and the Bank or a
majority-owned subsidiary of the Bank) of which such person is a director,
officer or partner or is directly or indirectly the beneficial owner of 10% or
more of any class of equity securities; (ii) any trust or other estate in which
such person has a substantial beneficial interest or as to which such person
serves as trustee or in a similar fiduciary capacity, provided, however, that
such term shall not include any tax-qualified employee stock benefit plan of
the Company and the Bank in which such person has a substantial beneficial
interest or serves as a trustee or in a similar fiduciary capacity; and (iii)
any relative or spouse of such person, or any relative of such spouse, who
either has the same home as such person or who is a director or officer of the
Company and the Bank or any of their subsidiaries.
The term "acting in concert" is defined to mean (1) knowing
participation in a joint activity or interdependent conscious parallel action
towards a common goal whether or not pursuant to an express agreement, or (2) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise.
The Company and the Bank may presume that certain persons are acting in concert
based upon, among other things, joint account relationships and the fact that
such persons have filed joint Schedules 13D with the SEC with respect to other
companies.
MARKETING ARRANGEMENTS
The Company and the Bank have retained Keefe, Bruyette to consult with
and to advise the Bank and the Company, and to assist the Company, on a best
efforts basis, in the distribution of the shares of Common Stock in the
Subscription and Community Offering. The services that Keefe, Bruyette will
provide include, but are not limited to (i) training the employees of the Bank
who will perform certain ministerial functions in the Subscription and
Community Offering regarding the mechanics and regulatory requirements of the
stock offering process, (ii) managing the Stock Information Center by assisting
interested stock subscribers and by keeping records of all stock orders, (iii)
preparing marketing materials, and (iv) assisting in the solicitation of
proxies from the Bank's members for use at the Special Meeting. For its
services, Keefe, Bruyette will receive a management fee of $50,000
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and a success fee of 1.15% of the aggregate Purchase Price of the shares
of Common Stock sold in the Subscription Offering and Community Offering
excluding shares purchased by the ESOP, and officers, directors and employees
of the Bank and members of their immediate families as well as shares issued to
the Foundation. The success fee paid to Keefe, Bruyette will be reduced by the
amount of the management fee. In the event that selected dealers are used to
assist in the sale of shares of Common Stock in the Community Offering, such
dealers will be paid a fee of up to 5.5% of the aggregate Purchase Price of the
shares sold by such dealers. The Company and the Bank have agreed to reimburse
Keefe, Bruyette for its out-of-pocket expenses, and its legal fees and to
indemnify Keefe, Bruyette against certain claims or liabilities, including
certain liabilities under the Securities Act, and will contribute to payments
Keefe, Bruyette may be required to make in connection with any such claims or
liabilities.
Sales of shares of Common Stock will be made primarily by registered
representatives affiliated with Keefe, Bruyette or by the broker-dealers
managed by Keefe, Bruyette. A Stock Information Center will be established at
the main office of the Bank. The Company will rely on Rule 3a4-1 of the
Exchange Act and sales of Common Stock will be conducted within the
requirements of such Rule, so as to permit officers, directors and employees to
participate in the sale of the Common Stock in those states where the law so
permits. No officer, director or employee of the Company or the Bank will be
compensated directly or indirectly by the payment of commissions or other
remuneration in connection with his or her participation in the sale of Common
Stock.
PROCEDURE FOR PURCHASING SHARES IN THE SUBSCRIPTION OFFERING
To ensure that each purchaser receives a prospectus at least 48 hours
before the Subscription Expiration Date (unless extended) in accordance with
Rule 15c2-8 of the Exchange Act, no prospectus will be mailed any later than
five days prior to such date or hand delivered any later than two days prior to
such date. Execution of the 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 Offering, an executed order
form with the required payment for each share subscribed for, or with
appropriate authorization for withdrawal from a deposit account at the Bank
(which may be given by completing the appropriate blanks in the order form),
must be received by the Bank by 12:00 noon, Eastern Time, on the Subscription
Expiration Date (unless extended). In addition, the Company and the Bank will
require a prospective purchaser to execute a certification in the form required
by applicable OTS regulations in connection with any sale of Common Stock.
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, the Bank will not accept orders
submitted on photocopied or facsimilied order forms nor order forms
unaccompanied by an executed certification form. The Company and the Bank have
the right to waive or permit the correction of incomplete or improperly
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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 the Bank, unless the Conversion has not been
completed within 45 days after the end of the Subscription Offering, unless
such period has been extended.
In order to ensure that Eligible Account Holders, Supplemental
Eligible Account Holders and Other Members are properly identified as to their
stock purchase priority, depositors as of the close of business on the
Eligibility Record Date (March 31, 1996) or the Supplemental Eligibility Record
Date (June 30, 1997) and depositors and borrowers as of the close of business
on the Voting Record Date (__________, 1997) must list all accounts on the
stock order form giving all names in each account and the account numbers.
Payment for subscriptions may be made (i) in cash if delivered in
person, (ii) by check or money order, or (iii) by authorization of withdrawal
from deposit accounts maintained with the Bank. No wire transfers will be
accepted. 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
completion or termination of the Conversion. If payment is made by
authorization of withdrawal from deposit accounts, the funds authorized to be
withdrawn from a deposit account will continue to accrue interest at the
contractual rates until completion or termination of the Conversion, but a hold
will be placed on such funds, thereby making them unavailable to the depositor
until completion or termination of the Conversion.
If a subscriber authorizes the Bank to withdraw the amount of the
purchase price from his deposit account, the Bank will do so as of the
effective date of the Conversion. The Bank 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 cancelled at the time of the withdrawal, without
penalty, and the remaining balance will earn interest at the passbook rate.
If the ESOP subscribes for shares during the Subscription Offering,
the ESOP will not be required to pay for the shares subscribed for at the time
it subscribes, but rather, may pay for such shares of Common Stock subscribed
for by it at the Purchase Price upon consummation of the Subscription and
Community Offerings, if all shares are sold, or upon consummation of the
Syndicated Community Offerings if shares remain to be sold in such offering,
provided that there is in force from the time of its subscription until such
time, a loan commitment from an unrelated financial institution or the Company
to lend to the ESOP, at such time, the aggregate Purchase Price of the shares
for which it subscribed.
Owners of self-directed IRAs may use the assets of such IRAs to
purchase shares of Common Stock in the Subscription and Community Offerings.
ERISA provisions and IRS regulations require that officers, directors and 10%
stockholders who use self-directed IRA funds to purchase shares of Common Stock
in the Offerings make such purchases for the
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exclusive benefit of the IRAs. Any interested parties wishing to use IRA funds
for stock purchases are advised to contact the Stock Sales Center at (718)
___-____ for additional information.
Certificates representing shares of Common Stock purchased will be
mailed to purchasers at the last address of such persons appearing on the
records of the Bank, or to such other address as may be specified in properly
completed order forms, as soon as practicable following consummation of the
Conversion. Any certificates returned as undeliverable will be disposed of in
accordance with applicable law.
RESTRICTIONS ON TRANSFER OF SUBSCRIPTION RIGHTS AND SHARES
Pursuant to the rules and regulations of the OTS, no person with
subscription rights may transfer 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 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. Federal regulations also prohibit any person from offering or
making an announcement of an offer or intent to make an offer to purchase such
subscription rights or shares of Common Stock prior to the completion of the
Conversion.
THE COMPANY AND THE BANK WILL REFER TO THE OTS ANY SITUATIONS THAT
THEY BELIEVE MAY INVOLVE A TRANSFER OF SUBSCRIPTION RIGHTS AND WILL NOT HONOR
ORDERS KNOWN BY THEM TO INVOLVE THE TRANSFER OF SUCH RIGHTS.
LIQUIDATION RIGHTS
In the unlikely event of a complete liquidation of the Bank in its
present mutual form, each depositor of the Bank would receive his pro rata
share of any assets of the Bank remaining after payment of claims of all
creditors (including the claims of all depositors to the withdrawal value of
their accounts). Each depositor's pro rata share of such remaining assets
would be in the same proportion as the value of his deposit account was to the
total value of all deposit accounts in the Bank at the time of liquidation.
After the Conversion, each depositor, in the event of a complete liquidation of
the Bank, would have a claim as a creditor of the same general priority as the
claims of all other general creditors of the Bank. However, except as
described below, his claim would be solely in the amount of the balance in his
deposit account plus accrued interest. He would not have an interest in the
value or assets of the Bank above that amount.
The Plan provides for the establishment, upon the completion of the
Conversion, of a special "liquidation account" for the benefit of Eligible
Account Holders and Supplemental Eligible Account Holders in an amount equal to
the Bank's net worth as of the date of its
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latest statement of financial condition contained in the final prospectus
utilized in the Conversion. As of April 30, 1997, the initial balance of the
liquidation account would be approximately $177.3 million. Each Eligible
Account Holder and Supplemental Eligible Account Holder, if he were to continue
to maintain his deposit account at the Bank, would be entitled, upon a complete
liquidation of the Bank after the Conversion, to an interest in the liquidation
account prior to any payment to the Company as the sole stockholder of the
Bank. Each Eligible Account Holder and Supplemental Eligible Account Holder
would have an initial interest in such liquidation account for each deposit
account, including passbook accounts, NOW accounts, money market deposit
accounts, and certificates of deposit, held in the Bank at the close of
business on March 31, 1996 or June 30, 1997, as the case may be. Each Eligible
Account Holder and Supplemental Eligible Account Holder will have a pro rata
interest in the total liquidation account for each of his deposit accounts
based on the proportion that the balance of each such deposit account on the
March 31, 1996 Eligibility Record Date (or the December 31, 1997 Supplemental
Eligibility Record Date, as the case may be) bore to the balance of all deposit
accounts in the Bank on such dates.
If, however, on any December 31 annual closing date of the Bank,
commencing December 31, 1997, the amount in any deposit account is less than
the amount in such deposit account on March 31, 1997 or June 30, 1997, as the
case may be, or any other annual closing date, then the interest in the
liquidation account relating to such deposit account would be reduced by the
proportion of any such reduction, and such interest will cease to exist if such
deposit account is closed. In addition, no interest in the liquidation account
would ever be increased despite any subsequent increase in the related deposit
account. Any assets remaining after the claims of general creditors (including
the claims of all depositors to the withdrawal value of their accounts) and the
above liquidation rights of Eligible Account Holders and Supplemental Eligible
Account Holders are satisfied would be distributed to the Company as the sole
stockholder of the Bank.
TAX ASPECTS
Consummation of the Conversion is expressly conditioned upon prior
receipt of either a ruling or an opinion of counsel with respect to federal tax
laws, and either a ruling or an opinion with respect to New York tax laws, to
the effect that consummation of the transactions contemplated hereby will not
result in a taxable reorganization under the provisions of the applicable codes
or otherwise result in any adverse tax consequences to the Bank, the Company or
to account holders receiving subscription rights, except to the extent, if any,
that subscription rights are deemed to have fair market value on the date such
rights are issued.
Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., has issued an
opinion to the Company and the Bank to the effect that, for federal income tax
purposes: (i) the Bank's change in form from mutual to stock ownership will
constitute a reorganization under Section 368(a)(1)(F) of the Code and neither
the Bank nor the Company will recognize any
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gain or loss as a result of the Conversion; (ii) no gain or loss will be
recognized by the Bank or the Company upon the purchase of the Bank's capital
stock by the Company; (iii) no gain or loss will be recognized by Eligible
Account Holders and Supplemental Eligible Account Holders upon the issuance to
them of deposit accounts in the Bank in its stock form plus their interests in
the liquidation account in exchange for their deposit accounts in the mutual
Bank; (iv) assuming the non-transferable subscription rights to purchase Common
Stock have no value, the tax basis of the depositors' deposit accounts in the
Bank immediately after the Conversion will be the same as the basis of their
deposit accounts immediately prior to the Conversion; (v) assuming the
non-transferable subscription rights to purchase Common Stock have no value,
the tax basis of each Eligible Account Holder's and Supplemental Eligible
Account Holder's interest in the liquidation account will be zero; and (vi) the
tax basis to the stockholders of the Common Stock of the Company purchased in
the Conversion will be the amount paid therefor, and the holding period for the
shares of Common Stock purchased by such persons will begin on the date of
consummation of the Conversion if purchased through the exercise of
subscription rights and on the day after the date of purchase if purchased in
the Community Offering. KPMG Peat Marwick, New York, New York, has also
rendered an opinion to the effect that the foregoing tax effects of the
Conversion under New York law are substantially the same as they are under
federal law.
The Company and the Bank have received a letter from RP Financial
stating its belief that the subscription rights do not have any value, based on
the fact that such rights are acquired by the recipients without cost, are
nontransferable and of short duration, and afford the recipients the right only
to purchase the Common Stock at a price equal to its estimated fair market
value, which will be the same price as the Purchase Price for the unsubscribed
shares of Common Stock. If the subscription rights granted to eligible
subscribers are deemed to have an ascertainable value, receipt of such rights
would be taxable probably only to those eligible subscribers who exercise the
subscription rights (either as a capital gain or ordinary income) in an amount
equal to such value, and the Company and the Bank could recognize gain on such
distribution. Eligible subscribers are encouraged to consult with their own
tax advisor as to the tax consequences in the event that such subscription
rights are deemed to have an ascertainable value.
Unlike private rulings, the letter of RP Financial is not binding on
the IRS, and the IRS could disagree with conclusions reached therein. In the
event of such disagreement, there can be no assurance that the IRS would not
prevail in a judicial or administrative proceeding.
DELIVERY OF CERTIFICATES
Certificates representing Common Stock issued in the Conversion will
be mailed by the Company's transfer agent to the persons entitled thereto at
the addresses of such persons appearing on the stock order form as soon as
practicable following consummation of the Conversion. Any certificates
returned as undeliverable will be held by the Company until claimed by persons
legally entitled thereto or otherwise disposed of in accordance with applicable
law. Until certificates for Common Stock are available and delivered to
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subscribers, such subscribers may not be able to sell the shares of Common
Stock for which they have subscribed, even though trading of the Common Stock
may have commenced.
REQUIRED APPROVALS
Various approvals of the OTS are required in order to consummate the
Conversion. The OTS has approved the Plan of Conversion, subject to approval
by the Bank's members and other standard conditions. The Company's holding
company application is currently pending.
The Company is required to make certain filings with state securities
regulatory authorities in connection with the issuance of Common Stock in the
Conversion.
JUDICIAL REVIEW
Any person aggrieved by a final action of the OTS which approves, with
or without conditions, or disapproves a plan of conversion may obtain review of
such action by filing in the court of appeals of the United States for the
circuit in which the principal office or residence of such person is located,
or in the United States Court of Appeals for the District of Columbia, a
written petition praying that the final action of the OTS be modified,
terminated or set aside. Such petition must be filed within 30 days after the
publication of notice of such final action in the Federal Register, or 30 days
after the mailing by the applicant of the notice to members as provided for in
12 C.F.R. Section 563b.6(c), whichever is later. The further procedure for
review is as follows: A copy of the petition is forthwith transmitted to the
OTS by the clerk of the court and thereupon the OTS files in the court the
record in proceeding, as provided in Section 2112 of Title 28 of the United
States Code. Upon the filing of the petition, the court has jurisdiction,
which upon the filing of the record is exclusive, to affirm, modify, terminate,
or set aside in whole or in part, the final action of the OTS. Review of such
proceedings is as provided in Chapter 7 of Title 5 of the United States Code.
The judgment and decree of the court is final, except that they are subject to
review by the Supreme Court upon certiorari as provided in Section 1254 of
Title 28 of the United States Code.
CERTAIN RESTRICTIONS ON PURCHASE OR TRANSFER OF SHARES AFTER THE CONVERSION
All shares of Common Stock purchased in connection with the Conversion
by a director or an executive officer of the Company and the Bank will be
subject to a restriction that the shares not be sold for a period of one year
following the Conversion, except in the event of the death of such director or
executive officer or pursuant to a merger or similar transaction approved by
the OTS. 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
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issued at a later date within this one year period as a stock dividend, stock
split or otherwise with respect to such restricted stock will be subject to the
same restrictions.
Purchases of Common Stock of the Company by directors, executive
officers and their associates during the three-year period following completion
of the Conversion may be made only through a broker or dealer registered with
the SEC, except with the prior written approval of the OTS. This restriction
does not apply, however, to negotiated transactions involving more than 1% of
the Company's outstanding Common Stock or to certain purchases of stock
pursuant to an employee stock benefit plan.
Pursuant to OTS regulations, the Company will generally be prohibited
from repurchasing any shares of the Common Stock within one year following
consummation of the Conversion, although the OTS under its current policies may
approve a request to repurchase shares of Common Stock following the six-month
anniversary of the Conversion. During the second and third years following
consummation of the Conversion, the Company may not repurchase any shares of
its Common Stock other than pursuant to (i) an offer to all stockholders on a
pro rata basis which is approved by the OTS; (ii) the repurchase of qualifying
shares of a director, if any; (iii) purchases in the open market by a
tax-qualified or non-tax-qualified employee stock benefit plan in an amount
reasonable and appropriate to fund the plan; or (iv) purchases that are part of
an open-market stock repurchase program not involving more than 5% of its
outstanding capital stock during a 12-month period, if the repurchases do not
cause the Bank to become undercapitalized and the Bank provides to the Regional
Director of the OTS no later than 10 days prior to the commencement of a
repurchase program written notice containing a full description of the program
to be undertaken and such program is not disapproved by the Regional Director.
The OTS may permit stock repurchases in excess of such amounts prior to the
third anniversary of the Conversion if exceptional circumstances are shown to
exist.
RESTRICTIONS ON ACQUISITION OF THE COMPANY
AND THE BANK
GENERAL
As described below, certain provisions in the Company's Certificate of
Incorporation and Bylaws and in the Company's and the Bank's benefit plans,
together with provisions of Delaware corporate law, may have anti-takeover
effects. In addition, regulatory restrictions may make it difficult for
persons or companies to acquire control of either the Company or the Bank.
Below is a summary of certain material restrictions on acquisitions of the
Company and the Bank.
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RESTRICTIONS IN THE COMPANY'S CERTIFICATE OF INCORPORATION AND BYLAWS
General. A number of provisions of the Company's Certificate of
Incorporation and Bylaws deal with matters of corporate governance and certain
rights of stockholders. The following discussion is a general summary of
certain provisions of the Company's Certificate of Incorporation and Bylaws
which might be deemed to have a potential "anti-takeover" effect. These
provisions may have the effect of discouraging a future takeover attempt which
is not approved by the Board of Directors but which individual Company
stockholders may deem to be in their best interests or in which stockholders
may receive a substantial premium for their shares over then current market
prices. As a result, stockholders who might desire to participate in such a
transaction may not have an opportunity to do so. Such provisions will also
render the removal of the current Board of Directors or management of the
Company more difficult. The following description of certain of the provisions
of the Certificate of Incorporation and Bylaws of the Company is necessarily
general and reference should be made in each case to such Certificate of
Incorporation and Bylaws, which are incorporated herein by reference. See
"Additional Information" as to how to obtain a copy of these documents.
Limitation on Voting Rights. Article 12.B. of the Company's
Certificate of Incorporation provides that no person shall directly or
indirectly offer to acquire or acquire the beneficial ownership of (i) more
than 10% of the issued and outstanding shares of any class of an equity
security of the Company, or (ii) any securities convertible into, or
exercisable for, any equity securities of the Company if, assuming conversion
or exercise by such person of all securities of which such person is the
beneficial owner which are convertible into, or exercisable for, such equity
securities (but of no securities convertible into, or exercisable for, such
equity securities of which such person is not the beneficial owner), such
person would be the beneficial owner of more than 10% of any class of an equity
security of the Company. The terms "person" and "beneficial ownership" are
broadly defined to prevent circumvention of this restriction.
The foregoing restrictions do not apply to (i) any offer with a view
toward public resale made exclusively to the Company by underwriters or a
selling group acting on its behalf, (ii) any tax-qualified employee benefit
plan or arrangement established by the Company or the Bank and any trustee of
such a plan or arrangement, and (iii) any other offer or acquisition approved
in advance by the affirmative vote of two-thirds of the Company's entire Board
of Directors. In the event that shares are acquired in violation of Article
12.B., 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 stockholders for a vote, and the Board of
Directors may cause such Excess Shares to be transferred to an independent
trustee for sale on the open market or otherwise, with the expenses of such
trustee to be paid out of the proceeds of sale. In addition, the Company may
refuse to recognize any transfer or attempted transfer of the Company's
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equity securities which would result in the transferee becoming the beneficial
owner of Excess Shares.
Board of Directors. Article 7.A. of the Certificate of Incorporation
of the Company contains provisions relating to the Board of Directors and
provides, among other things, that the Board of Directors shall be divided into
three classes as nearly equal in number as possible, with the term of office of
one class expiring each year. See "Management - Management of the Company."
The classified Board is intended to provide for continuity of the Board of
Directors and to make it more difficult and time consuming for a stockholder
group to fully use its voting power to gain control of the Board of Directors
without the consent of the incumbent Board of Directors of the Company.
Cumulative voting in the election of directors is not permitted.
Directors may be removed only for cause at a duly constituted meeting
of stockholders called expressly for that purpose upon the vote of the holders
of at least 80% of the total votes eligible to be cast by stockholders. Cause
for removal shall exist only if the director whose removal is proposed has been
either declared incompetent by order of a court, convicted of a felony or of an
offense punishable by imprisonment for a term of more than one year by a court
of competent jurisdiction, or deemed liable by a court of competent
jurisdiction for gross negligence or misconduct in the performance of such
director's duties to the Company. Any vacancy occurring in the Board of
Directors for any reason (including an increase in the number of authorized
directors) may be filled by the affirmative vote of a majority of the remaining
directors, whether or not a quorum of the Board of Directors is present, or the
sole remaining director of the Company, and a director appointed to fill a
vacancy shall serve until the expiration of the term to which he was appointed.
The Company's Bylaws govern nominations for election to the Board, and
requires all nominations for election to the Board of Directors other than
those made by the Board to be made by a stockholder eligible to vote at an
annual meeting of stockholders who has complied with the notice provisions in
that section. Written notice of a stockholder nomination must be delivered to,
or mailed to and received at, the principal executive offices of the Company
not later than 120 days prior to the anniversary date of the immediately
preceding annual meeting, provided that, with respect to the first scheduled
annual meeting following completion of the Conversion, notice must be received
no later than the close of business on January 2, 1998. Each such notice shall
set forth certain information as specified in Section 4.15 of the Bylaws,
including (a) as to each person whom the stockholder proposes to nominate as a
director, and as to the stockholder giving the notice, (i) the name, age,
business address and residence address of such person; (ii) the principal
occupation or employment of such person; (iii) the class and number of shares
of the Company's stock beneficially owned by such person; and (iv) such other
information regarding such person as would be required to be included in a
proxy statement filed pursuant to the proxy rules of the SEC; and (b) the name
and address of any other stockholders supporting such nominees and/or those
affiliated with, controlling or under
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common control with such persons, and the class and number of shares of the
Company's stock beneficially owned by such other stockholders.
The Company's Certificate of Incorporation provides that the personal
liability of the directors and officers of the Company for monetary damages
shall be eliminated to the fullest extent permitted by the General Corporation
Law of the State of Delaware as it exists on the effective date of the
Certificate of Incorporation or as such law may be thereafter in effect.
Section 102(b)(7) of the Delaware General Corporation Law currently provides
that directors (but not officers) of corporations that have adopted such a
provision will not be so liable, except (i) for any breach of the director's
duty of loyalty to the corporation or its shareholders, (ii) for acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law, (iii) for the payment of certain unlawful dividends and the
making of certain stock purchases or redemptions, or (iv) for any transaction
from which the director derived an improper personal benefit. This provision
would absolve directors of personal liability for negligence in the performance
of their duties, including gross negligence. It would not permit a director to
be exculpated, however, for liability for actions involving conflicts of
interest or breaches of the traditional "duty of loyalty" to the Company and
its stockholders, and it would not affect the availability of injunctive or
other equitable relief as a remedy.
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, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director, officer or employee of the Company or any
predecessor of the Company, or is or was serving at the request of the Company
or any predecessor of the Company as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines, excise taxes and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding to the fullest extent
authorized by the General Corporation Law of the State of Delaware, provided
that the Company shall not be liable for any amounts which may be due in
connection with a settlement of any action, suit or proceeding effected without
its prior written consent or any action, suit or proceeding initiated by any
person seeking indemnification thereunder without its prior written consent.
The indemnification provisions also permit the Company to pay reasonable
expenses in advance of the final disposition of any action, suit or proceeding
as authorized by the Company's Board of Directors, provided that the
indemnified person undertakes to repay the Company if it is ultimately
determined that such person was not entitled to indemnification. The rights of
indemnification provided in the Company's Certificate of Incorporation are not
exclusive of any other rights which may be available under the Company's
Bylaws, any insurance or other agreement, by vote of stockholders or directors
(regardless of whether directors authorizing such indemnification are
beneficiaries thereof) or otherwise. In addition, the Certificate of
Incorporation authorizes the Company to maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the Company,
whether or not the Company would
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have the power to provide indemnification to such person. These provisions are
designed to reduce, in appropriate cases, the risks incident to serving as a
director, officer, employee or agent and to enable the Company to attract and
retain the best personnel available.
The provisions regarding director elections and other provisions in
the Certificate of Incorporation and Bylaws are generally designed to protect
the ability of the Board of Directors to negotiate with the proponent of an
unfriendly or unsolicited proposal to take over or restructure the Company by
making it more difficult and time-consuming to change majority control of the
Board, whether by proxy contest or otherwise. The general effect of these
provisions will be to generally require at least two (and possibly three)
annual stockholders' meetings, instead of one, to effect a change in control of
the Board of Directors of the Company even if holders of a majority of the
Company's capital stock believed that a change in the composition of the Board
of Directors was desirable. Because a majority of the directors at any given
time will have prior experience as directors, these requirements will help to
ensure continuity and stability of the Company's management and policies and
facilitate long-range planning for the Company's business. The provisions
relating to removal of directors and filling of vacancies are consistent with
and supportive of a classified board of directors.
The procedures regarding stockholder nominations will provide the
Board of Directors with sufficient time and information to evaluate a
stockholder nominee to the Board and other relevant information, such as
existing stockholder support for the nominee. The proposed procedures,
however, will provide incumbent directors advance notice of a dissident slate
of nominees for directors, and will make it easier for the Board to solicit
proxies resisting such nominees. This may make it easier for the incumbent
directors to retain their status as directors, even when certain stockholders
view the stockholder nominations as in the best interests of the Company or its
stockholders.
Authorized Shares. Article 4 of the Certificate of Incorporation
authorizes the issuance of 100,000,000 shares of Common Stock and 25,000,000
shares of Preferred Stock. The shares of Common Stock and Preferred Stock were
authorized in an amount greater than that to be issued in the Conversion to
provide the Company's Board of Directors with as much flexibility as possible
to effect, among other transactions, financings, acquisitions, stock dividends,
stock splits and employee stock options. However, these additional authorized
shares may also be used by the Board of Directors consistent with its fiduciary
duty to deter future attempts to gain control of the Company. The Board of
Directors also has sole authority to determine the terms of any one or more
series of Preferred Stock, including voting rights, conversion rates, and
liquidation preferences. As a result of the ability to fix voting rights for a
series of Preferred Stock, the Board has the power, to the extent consistent
with its fiduciary duty, to issue a series of Preferred Stock to persons
friendly to management in order to attempt to block a post-tender offer merger
or other transaction by which a third party seeks control, and thereby assist
management to retain its position. The Company's Board currently has no plans
for the issuance of additional
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shares, other than the issuance of additional shares pursuant to stock benefit
plans and to the Foundation.
Meetings of Stockholders. The Company's Certificate of Incorporation
provides that any action required or permitted by the General Corporation Law
of the State of Delaware or the Certificate of Incorporation to be approved by
or consented to by the stockholders of the Company, must be effected at a duly
called annual or special meeting of stockholders and may not be effected by
written consent by stockholders in lieu of a meeting of stockholders. The
Certificate of Incorporation further provides that, with limited exceptions,
special meetings of stockholders may be called only by a three-fourths vote of
the Board of Directors.
Stockholder Proposals. The Company's Bylaws provide that only such
business as shall have been properly brought before an annual meeting of
stockholders shall be conducted at the annual meeting. In order to be properly
brought before an annual meeting following completion of the Conversion,
business must be (a) brought before the meeting by or at the direction of the
Board of Directors or (b) otherwise properly brought before the meeting by a
stockholder who has given timely and complete notice thereof in writing to the
Company. For stockholder proposals to be included in the Company's proxy
materials, the stockholder must comply with all the timing and informational
requirements of Rule 14a-8 of the Exchange Act. With respect to stockholder
proposals to be considered at the annual meeting of stockholders but not
included in the Company's proxy materials, the stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Company not less than 120 days prior to the anniversary date of the immediately
preceding annual meeting; provided, however, that with respect to the first
scheduled annual meeting following completion of the Conversion, such written
notice must be received by the Company not later than the close of business on
January 2, 1998. A stockholder's notice shall set forth as to each matter the
stockholder proposes to bring before the annual meeting certain information as
specified in Section 2.14 of the Bylaws, including (a) a brief description of
the proposal desired to be brought before the annual meeting, (b) the name and
address, as they appear on the Company's books, of the stockholder proposing
such business, and, to the extent known, any other stockholders known by such
stockholder to be supporting such proposal, (c) the class and number of shares
of the Company which are beneficially owned by the stockholder; and, to the
extent known, by any other stockholders known by such stockholder to be
supporting such proposal on the date of such stockholder notice, (d) the
identification of any person retained to make stockholder solicitations or
recommendations with respect to such proposal, and (e) any material interest of
the stockholder in such proposal. Any such proposal not made in accordance
with the Bylaws may be rejected.
The procedures regarding stockholder proposals are designed to provide
the Board with sufficient time and information to evaluate a stockholder
proposal and other relevant information, such as existing stockholder support
for the proposal. The proposed procedures, however, will give incumbent
directors advance notice of a stockholder proposal.
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This may make it easier for the incumbent directors to defeat a stockholder
proposal, even when certain stockholders view such proposal as in the best
interests of the Company or its stockholders.
Evaluation of Offers. The Certificate of Incorporation of the Company
further provides that the Board of Directors of the Company, when evaluating
any offer to the Company from another party to (i) make a tender or exchange
offer for any equity security of the Company, (ii) merge or consolidate the
Company with another corporation or entity or (iii) purchase or otherwise
acquire all or substantially all of the properties and assets of the Company,
may, consistent with the exercise of its fiduciary duties and in connection
with the exercise of its judgment in determining what is in the best interest
of the Company and the stockholders of the Company, give due consideration to
the extent permitted by law not only to the price or other consideration being
offered, but also to all other relevant factors, including, without limitation,
the financial and managerial resources and future prospects of the other party,
the possible effects on the business of the Company and its subsidiaries and on
the employees, customers, suppliers and creditors of the Company and its
subsidiaries, and the effects on the communities in which the Company's and its
subsidiaries' facilities are located. By having these standards in the
Certificate of Incorporation of the Company, the Board of Directors may be in a
stronger position to oppose such a transaction if the Board concludes that the
transaction would not be in the best interest of the Company, even if the price
offered is significantly greater than the then market price of any equity
security of the Company.
Stockholder Approval of Mergers and Certain Other Extraordinary
Transactions. Article 11 of the Company's Certificate of Incorporation
provides that any action taken by stockholders under Subchapter IX of the
Delaware General Corporation Law (which relates to merger or consolidation
transactions) and Subchapter X (which relates to sale of assets, dissolution
and winding up transactions) shall, with certain exceptions, generally require
the affirmative vote of at least 80% of the votes eligible to be cast by
stockholders. The supermajority 80% vote requirement of Article 11 of the
Certificate of Incorporation shall not be applicable to any transaction
approved in advance by at least two-thirds of the entire Board of Directors of
the Company, in which case the transaction will require only such stockholder
approval as specified under Delaware law. The Delaware General Corporation Law
requires the approval of the Board of Directors and the holders of a majority
of the outstanding stock of the Company entitled to vote thereon for mergers of
consolidations, and for sales, leases or exchanges of all substantially all of
the Company's assets. The Delaware General Corporation Law permits the Company
to merge with another corporation without obtaining the approval of the
Company's stockholders if: (i) the Company is the surviving corporation of the
merger; (ii) the merger agreement does not amend the Company's Certificate of
Incorporation; (iii) each share of the Company's stock outstanding immediately
prior to the effective date of the merger is to be an identical outstanding or
treasury share of the Company after the merger; and (iv) any authorized but
unissued shares or treasury shares of Common Stock to be issued or delivered
under the plan of merger plus those initially issuable upon conversion of any
other securities or
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obligations to be issued or delivered under such plan do not exceed 20% of the
shares of the Common Stock outstanding immediately prior to the effective date
of the merger.
Amendment of Certificate of Incorporation and Bylaws. Article 13 of
the Company's Certificate of Incorporation generally provides that any
amendment of the Certificate of Incorporation must be approved first by a
majority of the Board of Directors and then by the holders of 80% of the shares
of the Company entitled to vote in an election of directors, except that the
approval of only a majority of the shares of the Company entitled to vote in an
election of directors is required for any amendment previously approved by at
least two-thirds of the entire Board of Directors.
The Bylaws of the Company may be amended by a majority of the Board of
Directors or by the affirmative vote of a majority of the total shares entitled
to vote in an election of directors, except that the affirmative vote of at
least 80% of the total shares entitled to vote in an election of directors
shall be required to amend, adopt, alter, change or repeal any provision
inconsistent with certain specified provisions of the Bylaws.
DELAWARE CORPORATE LAW
In addition to the provisions contained in the Company's Certificate
of Incorporation, the Delaware General Corporation Law ("GCL") includes certain
provisions applicable to Delaware corporations, such as the Company, which may
be deemed to have an anti-takeover effect. Such provisions include
requirements relating to certain business combinations.
Section 203 of the GCL ("Section 203") imposes certain restrictions on
business combinations between the Company and large shareholders.
Specifically, Section 203 prohibits a "business combination" (as defined in
Section 203, generally including mergers, sales and leases of assets, issuances
of securities and similar transactions) between the Company or a subsidiary and
an "interested shareholder" (as defined in Section 203, generally the
beneficial owner of 15% or more of the Company Common Stock) within three years
after the person or entity becomes an interested shareholder, unless (i) prior
to the person or entity becoming an interested shareholder, the business
combination or the transaction pursuant to which such person or entity became
an interested shareholder shall have been approved by the Company's Board of
Directors, (ii) upon consummation of the transaction in which the interested
shareholder became such, the interested shareholder holds at least 85% of the
Company Common Stock (excluding shares held by persons who are both officers
and directors and shares held by certain employee benefit plans), or (iii) the
business combination is approved by the Company's Board of Directors and by the
holders of at least two-thirds of the outstanding Company Common Stock,
excluding shares owned by the interested shareholders.
One of the effects of Section 203 may be to prevent highly leveraged
takeovers, which depend upon getting access to the acquired corporation's
assets to support or repay
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acquisition indebtedness and certain coercive acquisition tactics. By
requiring approval of the holders of two-thirds of the shares held by
disinterested shareholders for business combinations involving an interested
shareholder, Section 203 may prevent any interested shareholder from taking
advantage of its position as a substantial, if not controlling, shareholder and
engaging in transactions with the Company that may not be fair to the Company's
other shareholders or that may otherwise not be in the best interests of the
Company, its shareholders and other constituencies.
For similar reasons, however, these provisions may make more difficult
or discourage an acquisition of the Company, or the acquisition of control of
the Company by a principal shareholder, and thus the removal of incumbent
management. In addition, to the extent that Section 203 discourages takeovers
that would result in the change of the Company's management, such a change may
be less likely to occur.
ANTI-TAKEOVER EFFECTS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS AND
MANAGEMENT REMUNERATION ADOPTED IN THE CONVERSION
The foregoing provisions of the Certificate of Incorporation and
Bylaws of the Company and Delaware law could have the effect of discouraging an
acquisition of the Company or stock purchases in furtherance of an acquisition,
and could accordingly, under certain circumstances, discourage transactions
which might otherwise have a favorable effect on the price of the Company's
Common Stock. In addition, such provisions may result in the Company being
deemed to be less attractive to a potential acquiror and/or might result in
stockholders receiving a lesser amount of consideration for their shares of
Common Stock than otherwise could have been available.
In addition, the Company and the Bank have also entered into
agreements with certain of their officers which provide such officers with
additional payments upon the officers' termination in connection with a change
in control of the Company or the Bank. See "Management - Management of the
Bank" and "- Employment Agreements." The foregoing provisions and limitations
may make it more difficult for companies or persons to acquire control of the
Bank. Additionally, the provisions could deter offers to the stockholders
which might be viewed by such stockholders to be in their best interests.
The Board of Directors believes that the provisions described above
are prudent and will reduce vulnerability to takeover attempts and certain
other transactions that are not negotiated with and approved by the Board of
Directors of the Company. The Board of Directors believes that these
provisions are in the best interests of the Company and its future
stockholders. In the Board of Directors' judgment, the Board of Directors is
in the best position to determine the true value of the Company and to
negotiate more effectively for what may be in the best interests of its
stockholders. Accordingly, the Board of Directors believes that it is in the
best interests of the Company and its future stockholders to encourage
potential acquirors to negotiate directly with the Board of Directors and that
these provisions will encourage such negotiations and discourage hostile
takeover attempts.
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It is also the Board of Directors' view that these provisions should not
discourage persons from proposing a merger or other transaction at prices
reflective of the true value of the Company and where the transaction is in the
best interests of all stockholders.
Despite the Board of Directors' belief as to the benefits to the
Company's stockholders of the foregoing provisions, these provisions also may
have the effect of discouraging a future takeover attempt in which stockholders
might receive a substantial premium for their shares over then current market
prices and may tend to perpetuate existing management. As a result,
stockholders who might desire to participate in such a transaction may not have
an opportunity to do so. The Board of Directors, however, has concluded that
the potential benefits of these provisions outweigh their possible
disadvantages.
The Board of Directors of the Company and the Bank are not aware of
any effort that might be made to acquire control of the Bank or the Company.
REGULATORY RESTRICTIONS
The Change in Bank Control Act provides that no person, acting
directly or indirectly or through or in concert with one or more other persons,
may acquire control of a savings and loan holding company unless the OTS has
been given 60 days' prior written notice. The HOLA provides that no company
may acquire "control" of a savings and loan holding company without the prior
approval of the OTS. Any company that acquires such control becomes a savings
and loan holding company subject to registration, examination and regulation by
the OTS. Pursuant to federal regulations, control of a savings and loan
holding company is conclusively deemed to have been acquired by, among other
things, the acquisition of more than 25% of any class of voting stock of the
institution or the ability to control the election of a majority of the
directors of an institution. Moreover, control is presumed to have been
acquired, subject to rebuttal, upon the acquisition of more than 10% of any
class of voting stock, or of more than 25% of any class of stock, of a savings
and loan holding company where certain enumerated "control factors" are also
present in the acquisition. The OTS may prohibit an acquisition if (i) it
would result in a monopoly or substantially lessen competition, (ii) the
financial condition of the acquiring person might jeopardize the financial
stability of the institution, or (iii) the competence, experience or integrity
of the acquiring person indicates that it would not be in the interest of the
depositors or of the public to permit the acquisition of control by such
person. The foregoing restrictions do not apply to the acquisition of a
savings institution's capital stock by one or more tax-qualified employee stock
benefit plans, provided that the plan or plans do not have beneficial ownership
in the aggregate of more than 25% of any class of equity security.
161
<PAGE> 201
DESCRIPTION OF CAPITAL STOCK OF THE COMPANY
GENERAL
The Company is authorized to issue 100,000,000 shares of Common Stock
having a par value of $0.01 per share and 25,000,000 shares of preferred stock
having a par value of $0.01 per share (the "Preferred Stock"). The Company
currently expects to issue up to a maximum of 35,595,238 shares (40,934,524
shares in the event that the maximum of the Valuation Range is increased by
15%) of Common Stock and no shares of Preferred Stock in the Conversion. Each
share of the Company's Common Stock will have the same relative rights as, and
will be identical in all respects with, each other share of Common Stock. Upon
payment of the Purchase Price for the Common Stock in accordance with the Plan
of Conversion, all such stock will be duly authorized, fully paid and
nonassessable. Presented below is a description of all aspects of the
Company's capital stock which are deemed material to an investment decision
with respect to the Conversion.
THE COMMON STOCK OF THE COMPANY WILL REPRESENT NONWITHDRAWABLE
CAPITAL, WILL NOT BE AN ACCOUNT OF AN INSURABLE TYPE, AND WILL NOT BE INSURED
BY THE FDIC.
COMMON STOCK
Distributions. The Company can pay dividends if, as and when declared
by its Board of Directors, subject to compliance with limitations which are
imposed by law. See "Dividend Policy." The holders of Common Stock of the
Company will be entitled to receive and share equally in such dividends as may
be declared by the Board of Directors of the Company out of funds legally
available therefor. If the Company issues Preferred Stock, the holders thereof
may have a priority over the holders of the Common Stock with respect to
dividends.
Voting Rights. Upon Conversion, the holders of Common Stock of the
Company will possess exclusive voting rights in the Company. They will elect
the Company's Board of Directors and act on such other matters as are required
to be presented to them under Delaware law or the Company's Certificate of
Incorporation or as are otherwise presented to them by the Board of Directors.
Each holder of Common Stock will be entitled to one vote per share and will not
have any right to cumulate votes in the election of directors. Cumulative
voting means that holders of stock of a corporation are entitled, in the
election of directors, to cast a number of votes equal to the number of shares
which they own multiplied by the number of directors to be elected Because a
stockholder entitled to cumulative voting may cast all of his votes for one
nominee or disperse his votes among nominees as he chooses, cumulative voting
is generally considered to increase the ability of minority stockholders to
elect nominees to a corporation's board of directors. Under certain
circumstances, shares in excess of 10.0% of the issued and outstanding shares
of Common Stock may be considered "Excess Shares" and, accordingly, not be
entitled to vote. See
162
<PAGE> 202
"Restrictions on Acquisition of the Company and the Bank." If the Company
issues Preferred Stock, holders of the Preferred Stock may also possess voting
rights.
Liquidation. In the event of any liquidation, dissolution or winding
up of the Bank, the Company, as holder of the Bank's capital stock, would be
entitled to receive, after payment or provision for payment of all debts and
liabilities of the Bank (including all deposit accounts and accrued interest
thereon) and after distribution of the balance in the special liquidation
account to Eligible Account Holders and Supplemental Eligible Account Holders
(see "The Conversion - Liquidation Rights"), all assets of the Bank available
for distribution. In the event of liquidation, dissolution or winding up of
the Company, the holders of its Common Stock would be entitled to receive,
after payment or provision for payment of all its debts and liabilities, all of
the assets of the Company available for distribution. If Preferred Stock is
issued, the holders thereof may have a priority over the holders of the Common
Stock in the event of liquidation or dissolution.
Preemptive Rights. Holders of the Common Stock of the Company will
not be entitled to preemptive rights with respect to any shares which may be
issued. The Common Stock is not subject to redemption.
PREFERRED STOCK
None of the shares of the Company's authorized Preferred Stock will be
issued in the Conversion. Such stock may be issued with such preferences and
designations as the Board of Directors may from time to time determine. The
Board of Directors can, without stockholder approval, issue preferred stock
with voting, dividend, liquidation and conversion rights which could dilute the
voting strength of the holders of the Common Stock and may assist management in
impeding an unfriendly takeover or attempted change in control. The Company
has no present plans to issue Preferred Stock.
DESCRIPTION OF CAPITAL STOCK OF THE BANK
GENERAL
The Federal Stock Charter of the Bank authorizes the issuance of
capital stock consisting of 1,000 shares of common stock, par value $0.01 per
share. Each share of common stock of the Bank will have the same relative
rights as, and will be identical in all respects with, each other share of
common stock. Upon Conversion, all of the issued and outstanding common stock
of the Bank will be held by the Company as the Bank's sole stockholder. The
capital stock of the Bank will represent nonwithdrawable capital, will not be
an account of an insurable type, and will not be insured by the FDIC.
Presented below is a description of all aspects of the Bank's capital stock
which are deemed material to an investment decision with respect to the
Conversion.
163
<PAGE> 203
DIVIDENDS
The Company, as the holder of the Bank's common stock will be entitled
to receive and to share equally in such dividends as may be declared by the
Board of Directors of the Bank out of funds legally available therefore. See
"Dividend Policy" for certain restrictions on the payment of dividends.
VOTING RIGHTS
Immediately after the Conversion, the holders of the Bank's common
stock, which will consist solely of the Company, will possess exclusive voting
rights in the Bank. Each holder of shares of common stock will be entitled to
one vote for each share held and there shall be no right to cumulate votes.
LIQUIDATION
In the event of any liquidation, dissolution or winding up of the
Bank, the holders of common stock will be entitled to receive, after payment of
all debts and liabilities of the Bank (including all deposit accounts and
accrued interest thereon), and distribution of the balance in the special
liquidation account to Eligible Account Holders and Supplemental Eligible
Account Holders, all assets of the Bank available for distribution in cash or
in kind. If additional preferred stock is issued subsequent to the Conversion,
the holders thereof may also have priority over the holders of common stock in
the event of liquidation or dissolution.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Company's Common Stock is
_________________.
EXPERTS
The financial statements of the Bank as of December 31, 1996 and
1995, and for each of the years in the three-year period ended December 31,
1996, included in this Prospectus have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their report, with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
RP Financial has consented to the publication herein of the summary of
its report to the Bank and Company setting forth its opinion as to the
estimated pro forma market value of the Common Stock upon Conversion and its
opinion with respect to subscription rights.
164
<PAGE> 204
LEGAL AND TAX OPINIONS
The legality of the Common Stock and the Federal income tax
consequences of the Conversion will be passed upon for the Bank and the Company
by Elias, Matz, Tiernan & Herrick L.L.P., Washington, D.C., special counsel to
the Bank and the Company. The New York income tax consequences of the
Conversion will be passed upon for the Bank and the Company by KPMG Peat
Marwick. The federal income tax consequences of certain matters relating to
establishment of the Foundation will be passed upon for the Bank and the
Company by Potter Anderson & Corroon. Certain legal matters will be passed
upon for Keefe, Bruyette & Woods, Inc. by Silver, Freedman & Taff, L.L.P.,
Washington, D.C.
ADDITIONAL INFORMATION
The Company has filed with the SEC a Registration Statement under the
Securities Act with respect to the Common Stock offered hereby. As permitted
by the rules and regulations of the SEC, this Prospectus does not contain all
the information set forth in the Registration Statement. Such information,
including the Conversion Valuation Appraisal Report which is an exhibit to the
Registration Statement, can be examined without charge at the public reference
facilities of the SEC located at 450 Fifth Street, N.W., Washington, D.C.
20549, and copies of such material can be obtained from the SEC at prescribed
rates. In addition, the SEC maintains a web site (http://www.sec.gov) that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC, including the
Company. The statements contained in this Prospectus as to the contents of any
contract or other document filed as an exhibit to the Registration Statement
are, of necessity, brief descriptions thereof and are not necessarily complete;
each such statement is qualified by reference to such contract or document.
The Bank has filed an Application for Conversion with the OTS with
respect to the Conversion. This Prospectus omits certain information contained
in that application. The Application may be examined at the principal office
of the OTS, 1700 G Street, N.W., Washington, D.C. 20552, and at the Northeast
Regional Office of the OTS located at 10 Exchange Place, 18th Floor, Jersey
City, New Jersey 07302.
The Company has filed with the Office of Thrift Supervision an
Application to Form a Holding Company. This Prospectus omits certain
information contained in such Application. Such Application may be inspected
at the principal office of the OTS, 1700 G Street, N.W., Washington, D.C.
20552, and at the Northeast Regional Office of the OTS located at 10 Exchange
Place, 18th Floor, Jersey City, New Jersey 07302.
In connection with the Conversion, the Company will register its
Common Stock with the SEC under Section 12 of the Exchange Act, and, upon such
registration, the Company and the holders of its stock will become subject to
the proxy solicitation rules, reporting
165
<PAGE> 205
requirements and restrictions on stock purchases and sales by directors,
officers and greater than 10% stockholders, the annual and periodic reporting
and certain other requirements of the Exchange Act. Under the Plan, the
Company has undertaken that it will not terminate such registration for a
period of at least three years following the Conversion.
A copy of the Plan of Conversion and Certificate of Incorporation and
the Bylaws of the Company and the Federal Stock Charter and Bylaws of the Bank
are available without charge from the Bank. Requests for such information
should be directed to: _______________________, Staten Island Savings Bank, 15
Beach Street, Staten Island, New York 10304.
166
<PAGE> 206
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . . . . . . F-2
Statements of Condition as of April 30, 1997 (Unaudited)
and December 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Income for the Four Months Ended
April 30, 1997 and 1996 (Unaudited) and the Years Ended 44
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statements of Changes in Net Worth for the Four Months Ended
April 30, 1997 (Unaudited) and the Years Ended F-4
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statements of Cash Flows for the Four Months Ended
April 30, 1997 and 1996 (Unaudited) and the Years Ended F-5
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-6
</TABLE>
All schedules are omitted as the required information is not applicable or the
information is presented in the Consolidated Financial Statements.
The financial statements of Staten Island Bancorp, Inc. have been omitted
because Staten Island Bancorp, Inc. has not yet issued any stock, has no assets
or liabilities, and has not conducted any business other than of an
organizational nature.
F-1
<PAGE> 207
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees of
Staten Island Savings Bank:
We have audited the accompanying statements of condition of Staten Island
Savings Bank (a mutual savings bank chartered by the State of New York) (the
"Bank") as of December 31, 1996 and 1995, and the related statements of income,
changes in net worth and cash flows for each of the years in the three-year
period ended December 31, 1996. These financial statements are the
responsibility of the Bank's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Staten Island Savings Bank as
of December 31, 1996 and 1995, and the results of its operations and its cash
flows for each of the years in the three year period ended December 31, 1996, in
conformity with generally accepted accounting principles.
As explained in Note 9 to the financial statements, effective January 1, 1995,
the Bank changed its method of accounting for New York State and New York City
income taxes.
/s/ Arthur Andersen LLP
New York, New York
January 28, 1997
F-2
<PAGE> 208
STATEN ISLAND SAVINGS BANK
STATEMENTS OF CONDITION
APRIL 30, 1997 (UNAUDITED) AND DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION> December 31
April 30 -------------------------------
ASSETS 1997 1996 1995
------ -------------- -------------- --------------
(Unaudited) (000's omitted)
<S> <C> <C> <C>
ASSETS:
Cash and due from banks $ 39,594 $ 43,522 $ 57,663
Federal funds sold 74,150 9,100 19,600
Securities available for sale 677,486 703,134 788,622
Trading securities 14,406 - -
Loans, net 976,501 968,015 801,137
Accrued interest receivable 11,892 11,739 13,775
Bank premises and equipment, net 19,521 18,675 16,680
Intangible assets, net 19,798 20,490 22,633
Other assets 14,947 7,648 8,020
-------------- -------------- --------------
Total assets $ 1,848,295 $ 1,782,323 $ 1,728,130
============== ============== ==============
LIABILITIES AND NET WORTH
-------------------------
LIABILITIES:
Due depositors-
Savings $ 822,431 $ 832,584 $ 739,697
Time 527,588 500,570 467,362
Money market 81,924 79,704 83,343
NOW accounts 16,708 14,298 55,124
Demand deposits 158,142 150,592 190,091
-------------- -------------- --------------
1,606,793 1,577,748 1,535,617
Borrowed Funds 30,043 54 46
Advances from borrowers for taxes and insurance 6,940 4,563 3,354
Accrued interest and other liabilities 27,224 28,878 39,031
-------------- -------------- --------------
Total liabilities 1,671,000 1,611,243 1,578,048
-------------- -------------- --------------
COMMITMENTS AND CONTINGENCIES (Note 10)
NET WORTH:
Surplus 32,777 32,070 30,007
Undivided profits 141,061 134,880 115,168
Unrealized appreciation on securities available for sale, net 3,457 4,130 4,907
-------------- -------------- --------------
Total net worth 177,295 171,080 150,082
-------------- -------------- --------------
Total liabilities and net worth $ 1,848,295 $ 1,782,323 $ 1,728,130
============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 209
STATEN ISLAND SAVINGS BANK
STATEMENTS OF CHANGES IN NET WORTH
FOR THE FOUR MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
AND THE YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
<CAPTION>
Unrealized
Appreciation
(Depreciation)
on Securities
Undivided Available for
Surplus Profits Sale, net Total
---------- ------------ ------------------ ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1993 $ 27,064 $ 88,682 $ 2,873 $ 118,619
Net income - 1994 - 16,204 - 16,204
Statutory transfer to surplus fund 1,620 (1,620) - -
Net change in unrealized depreciation on
securities available for sale - - (9,379) (9,379)
---------- ------------ ---------- ------------
BALANCE, December 31, 1994 28,684 103,266 (6,506) 125,444
Net income - 1995 - 13,225 - 13,225
Statutory transfer to surplus fund 1,323 (1,323) - -
Net change in unrealized appreciation on
securities available for sale - - 11,413 11,413
---------- ------------ ---------- ------------
BALANCE, December 31, 1995 30,007 115,168 4,907 150,082
Net income - 1996 - 21,775 - 21,775
Statutory transfer to surplus fund 2,178 (2,178) - -
Net change in unrealized depreciation on
securities available for sale - - (777) (777)
---------- ------------ ---------- ------------
BALANCE, December 31, 1996 32,185 134,765 4,130 171,080
Net income - four months ended
April 30, 1997 - 6,888 - 6,888
Statutory transfer to surplus fund 592 (592) - -
Net change in unrealized depreciation on
securities available for sale - - (673) (673)
---------- ------------ ---------- ------------
BALANCE, April 30, 1997 $ 32,777 $ 141,061 $ 3,457 $ 177,295
========== ============ ========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 210
STATEN ISLAND SAVINGS BANK
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Year Ended
Four Months Ended April 30 December 31
---------------------------- -------------------------------------------
1997 1996 1996 1995 1994
------------ ------------ ------------ ------------ ------------
(Unaudited) (000's omitted)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,888 $ 6,868 $ 21,775 $ 13,225 $ 16,204
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 562 502 1,581 1,436 1,252
Amortization of bond and mortgage premiums (2,511) 146 1,053 4,724 6,831
Amortization of intangible assets 692 759 2,143 1,155 536
Loss on sale of available for sale securities 277 (218) 2,710 305 487
Other noncash expense (income) 174 155 (1,717) 161 3,047
Provision for possible loan losses 4,667 - 1,000 - 76
Change in depreciation (appreciation)
on available for sale securities 1,294 10,779 899 (20,562) 16,896
Increase in deferred loan fees 100 160 578 105 395
Decrease in accrued interest receivable (153) (349) 2,036 2,043 711
Decrease (increase) in other assets (6,291) (7,230) 197 (2,271) 856
(Decrease) increase in accrued interest and
other liabilities 2,594 (8,688) (8,023) 6,471 1,326
(Increase) decrease in deferred income taxes (5,156) 164 (2,122) 13,488 (7,589)
Recoveries 448 547 966 336 241
------------ ------------ ------------ ------------ ------------
Net cash provided by
operating activities 3,585 3,595 23,076 20,616 41,269
------------ ------------ ------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of investment securities
and time deposits - - - 110,258 114,968
Purchases of investment securities and
time deposits - - - - (131,371)
Maturities of available for sale securities 43,540 80,318 189,180 84,379 102,865
Sales of available for sale securities 19,365 22,249 240,417 121,526 27,189
Purchases of available for sale securities (53,281) (108,683) (345,700) (178,036) (63,689)
(Decrease) increase in unrealized appreciation
on available for sale securities, net (673) (5,972) (777) 11,413 (9,379)
Principal collected on loans 154,908 112,662 282,337 170,057 96,050
Loans made to customers (166,550) (137,817) (453,066) (239,012) (192,610)
Mortgage loans purchased - - - (10,061) (699)
Capital expenditures (1,183) (1,106) (3,448) (2,481) (1,290)
Acquisition of Gateway Bancorp, Inc.,
net of cash acquired - - - 13,564 -
------------ ------------ ------------ ------------ -----------
Net cash used in investing
activities (3,874) (38,349) (91,057) (6,042) (57,966)
------------- ------------- ------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposit accounts 31,422 15,085 43,340 32,705 2,526
Borrowings 29,989 - - - -
------------ ------------ ------------ ------------ -----------
61,411 15,085 43,340 32,705 2,526
------------ ------------ ------------ ------------ ------------
Net (decrease) increase in
cash and cash equivalents 61,122 (19,669) (24,641) 47,279 (14,171)
CASH AND CASH EQUIVALENTS, beginning of year 52,622 77,263 77,263 29,984 44,155
------------ ------------ ------------ ------------ ------------
CASH AND CASH EQUIVALENTS, end of year $ 113,744 $ 57,594 $ 52,622 $ 77,263 $ 29,984
============ ============ ============ ============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for-
Interest $ 14,619 $ 14,727 $ 50,450 $ 44,200 $ 36,545
Income taxes 3,340 3,110 14,381 14,081 12,263
============ ============ ============ ============ ============
Acquisition of Gateway Bancorp, Inc.-
Fair value of assets acquired $ - $ - $ - $ 338,978 $ -
Fair value of liabilities assumed - - - (281,726) -
------------ ------------ ------------ ------------ -----------
Net cash payments $ - $ - $ - $ 57,252 $ -
============ ============ ============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE> 211
STATEN ISLAND SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
FOUR MONTHS ENDED APRIL 30, 1997 (UNAUDITED) AND
THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1. ORGANIZATION
Staten Island Savings Bank (the "Bank") was a state chartered mutual savings
bank founded in 1864. The Bank operates 16 branches in Staten Island, New York
and one branch in Brooklyn, New York and followed regulations promulgated by the
New York State Department of Banking and the Federal Deposit Insurance
Corporation. The Bank is a community bank providing a complete line of retail
and commercial banking services along with trust services. Individual customer
deposits of up to $100,000 are insured by the Federal Deposit Insurance
Corporation.
Acquisition
On August 18, 1995, the Bank acquired all of the outstanding shares of Gateway
Bancorp, Inc., a Staten Island commercial bank with over $300 million in total
assets, for cash consideration totaling $57,933,000, including deal costs.
The acquisition has been accounted for using the purchase method of accounting
and, accordingly, the purchase price has been allocated to the assets acquired
and the liabilities assumed based upon the fair values at the date of
acquisition. The excess of the purchase price over the fair values of the net
assets acquired was $15,613,000 and has been recorded as goodwill, which is
being amortized on a straight-line basis over 20 years. The amount of goodwill
amortization for 1996 and 1995 was $781,000 and $272,000, respectively, and is
included in other expense.
Results of operations after the acquisition date are included in the 1995
statement of income. The following pro forma information has been prepared
assuming that this acquisition had taken place at the beginning of 1994 after
giving effect to certain pro forma adjustments, including, among others, the
implied cost of capital and the amortization of intangibles resulting from the
transaction. The pro forma financial information is not necessarily indicative
of the results of operations as they would have been if the Bank and Gateway
Bancorp, Inc. had been a single entity during all of 1995 and 1994, nor is it
necessarily indicative of the results of operations which may occur in the
future.
<TABLE>
<CAPTION>
1995 1994
-------------- --------------
<S> <C> <C>
Net interest and dividend income $ 70,336 $ 68,065
Net income 13,583 17,390
</TABLE>
2 SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
F-6
<PAGE> 212
The accounting and reporting policies of the Bank conform to general practices
within the banking industry. The following footnotes describe the most
significant of these policies. In preparing the financial statements, management
is required to make estimates and assumptions that affect the reported assets,
liabilities, revenues and expenses as of the dates of the financial statements.
Actual results could differ significantly from those estimates.
Cash and Cash Equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash and
due from banks and federal funds sold.
Trading Securities
Trading securities are carried at fair value, with unrealized gains and losses
included in earnings.
Securities Held to Maturity
Debt securities are carried at cost, adjusted for amortization of premiums and
accretion of discounts. Mortgage-backed certificates are stated at the unpaid
principal amount net of unearned discount and premiums. Premiums are amortized
over the period to maturity or earlier call date and discounts are accreted to
maturity date using a method which approximates the level-yield method.
Securities Available For Sale
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," debt and
equity securities used as part of the Bank's asset/liability management that may
be sold in response to changes in interest rates, prepayments and other factors
have been classified as available for sale. Such securities are reported at fair
value, with unrealized gains and losses excluded from earnings and reported on
an after-tax basis in a separate component of net worth. Gains and losses on the
disposition of securities are recognized on the specific-identification method
in the period in which they occur.
On November 15, 1995, the Financial Accounting Standards Board issued a special
report entitled, "A Guide to Implementation of Statement No. 115 on Accounting
for Certain Investments in Debt and Equity Securities, Questions and Answers"
(the "Guide"). The Guide permitted a one-time reassessment and related
reclassification from the held to maturity category that will not call into
question the intent of the enterprise to hold other debt securities to maturity
in the future. In December 1995, the Bank reassessed its securities portfolio
resulting in the reclassification of all securities held to maturity (amortized
cost of $314,588,000 with a corresponding market value of $316,725,000) to the
available for sale category. The reclassification resulted in a $1,122,000
increase in net worth at December 31, 1995, due to unrealized gains on
securities transferred to available for sale amounting to $2,137,000 less
estimated taxes of $1,015,000.
Mortgage Premiums and Discounts
Premiums and discounts on purchased mortgages are amortized over the average
life of the loan using a method which approximates the level-yield method.
F-7
<PAGE> 213
Loans
Loans are stated at the principal amount outstanding, net of unearned income.
Loan origination fees are recognized in interest income as an adjustment to
yield over the life of the loan. Loans are placed on nonaccrual status when
management has determined that the borrower will be unable to meet contractual
principal or interest obligations or when unsecured interest or principal
payments are 90 days past due. When a loan is classified as nonaccrual, the
recognition of interest income ceases. Interest previously accrued and remaining
unpaid is reversed against income. Cash payments received are applied to
principal, and interest income is not recognized unless management determines
that the financial condition and payment record of the borrower warrant the
recognition of income.
Effective January 1, 1995, the Bank adopted the accounting and disclosure
guidance in SFAS No. 114, entitled, "Accounting by Creditors for Impairment of a
Loan," as amended by SFAS No. 118, entitled, "Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures." Both pronouncements
establish the accounting by creditors for impairment of certain loans with the
latter adding as to how a creditor recognizes interest income related to those
impaired loans. The Bank has defined its impaired loans as its nonaccrual loans.
Pursuant to this accounting guidance, a valuation allowance is recorded on
impaired loans to reflect the difference, if any, between the loan face value
and the present value of projected cash flows, observable fair value or
collateral value. This valuation allowance is reported within the overall
allowance for loan losses. Such change in accounting was not material to the
financial statements.
Allowance for Possible Loan Losses
The allowance for possible loan losses is established by management to absorb
future charge-offs of loans deemed uncollectible. The allowance is increased or
decreased by charges to operations and reduced by net charge-offs. The amount of
the allowance is based on estimates and the ultimate losses may vary from the
current estimates. These estimates are evaluated periodically and, as
adjustments become necessary, they are reflected in operations in the periods in
which they become known. Considerations in this evaluation include past and
anticipated loss experience, evaluation of real estate collateral, as well as
current and anticipated economic conditions and maintenance of the allowance at
a level adequate to absorb unforeseeable losses inherent in the portfolio at
the reporting date.
Bank Premises and Equipment
Bank premises and equipment are carried at cost, less allowance for depreciation
and amortization applied on a straight-line basis over the estimated useful
lives of 10 to 50 years for buildings and improvements and 3 to 10 years for
furniture, fixtures and equipment.
Core Deposit Intangibles
Core deposit intangibles, which resulted from acquisitions, are being amortized
on a straight-line basis to expense over the estimated periods benefited, not
exceeding six years. Core deposit intangibles of $ 5,056,000, $5,444,000 and
$6,600,000 as of April 30, 1997, December 31, 1996 and 1995, respectively, are
included in intangible assets in the accompanying financial statements.
F-8
<PAGE> 214
Investments in Real Estate
Investments in real estate consist of real estate acquired through foreclosure
or by deed in lieu of foreclosure ("real estate owned" or "REO"). REO properties
are carried at the lower of cost or fair value at the date of foreclosure (new
cost basis) and at the lower of the new cost basis or fair value less estimated
selling costs thereafter.
Interest Income
Interest Income includes interest income on loans and investment securities and
dividend income received on investment securities.
The operations of the Bank are substantially dependent on its net interest
income, which is the difference between the interest income earned on its
interest earning assets and the interest expense paid on its interest bearing
liabilities. Like most savings institutions, the Bank's earnings are affected
by changes in market interest rates and the economic factors beyond its
control. Decreases in the Bank's average interest rate spread could adversely
affect the Bank's net interest income.
Income Taxes
Deferred income taxes provide for temporary differences between items of income
or expense reported in the financial statements and those reported for income
tax purposes.
New Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
entitled, "Accounting for the Impairment of Long-Lived Assets to Be Disposed
Of." This statement requires that long-lived assets and certain identifiable
intangibles held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of the
asset may not be recoverable. The pronouncement is effective for fiscal years
beginning after December 15, 1995, although earlier implementation is permitted.
In May 1995, the Financial Accounting Standards Board issued SFAS No. 122,
entitled, "Accounting for Mortgage Servicing Rights," which is an amendment to
SFAS No. 65, entitled, "Accounting for Certain Mortgage Banking Activities."
This statement requires the recognition as separate assets rights to service
mortgage loans for others, no matter how those servicing rights are acquired.
The pronouncement is effective for fiscal years beginning after December 15,
1995, although earlier implementation is permitted.
In June 1996, the Financial Accounting Standards Board issued SFAS No. 125,
"Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities." This statement is effective for transfers and servicing of
financial assets and extinguishment of liabilities occurring after December 31,
1996.
The adoption of SFAS Nos. 121, 122 and 125 did not have a material effect on the
Bank's financial statements.
Net Worth
The surplus fund primarily represents accumulated mandatory transfers from
undivided profits required by New York State banking regulations. Such mandatory
transfers are computed as 10% of "net earnings," as defined, and are required in
each quarter so long as the net worth of the Bank is less than 10% of the amount
due depositors.
Unaudited Financial Information
All information as of April 30, 1997 and for the four-month periods ended April
30, 1997 and 1996
F-9
<PAGE> 215
is unaudited. The unaudited information furnished reflects all adjustments,
which consist solely of normal recurring accruals, which are, in the opinion of
management, necessary for a fair presentation of the financial position at April
30, 1997 and the results of operations and cash flows for four-month periods
ended April 30, 1997 and 1996. The results of the four-month periods are not
necessarily indicative of the results of the Bank which may be expected for the
entire year.
Reclassifications
Certain reclassifications have been made to the December 1996, 1995 and 1994
financial statements to conform with the April 30, 1997 presentation.
3. REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary actions by
regulators that, if undertaken could have a direct material effect on the Bank's
financial statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's assets, liabilities,
and certain off-balance sheet items calculated under regulatory accounting
practices. The Bank's capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings, and
other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the table
below) of total and Tier 1 capital (as defined in the regulations) to risk
weighted assets (as defined), and of Tier 1 capital (as defined) to average
assets (as defined). Management believes, as of December 31, 1996, that the Bank
meets all capital adequacy requirements to which it is subject.
As of December 31, 1996, the most recent notification from the Federal Deposit
Insurance Corporation categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based
and Tier 2 leverage ratios as set forth in the table. There are no conditions or
events since that notification that management believes have changed the
institution's category.
The Bank's actual capital amounts and ratios are also presented in the following
table (000's omitted):
<TABLE>
<CAPTION>
To Be Well Capitalized
For Capital Adequacy Under Prompt Corrective
Actual Purposes Action Provisions
------------------- ----------------------- -------------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total capital (to risk $155,287 18.8% $66,260 greater than 8.0% $82,826 greater than 10.0%
weighted assets)
Tier 1 capital (to risk 145,310 17.5 33,130 greater than 4.0 49,695 greater than 6.0
weighted assets)
Tier 1 capital (to average 145,310 8.3 70,029 greater than 4.0 87,536 greater than 5.0
assets)
As of December 31, 1995:
Total capital (to risk 132,461 17.3 61,145 greater than 8.0 76,432 greater than 10.0
weighted assets)
</TABLE>
F-10
<PAGE> 216
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Tier 1 capital (to risk 121,757 15.9 30,573 greater than 4.0 45,859 greater than 6.0
weighted assets)
Tier 1 capital (to average 121,757 8.1 60,231 greater than 4.0 75,288 greater than 5.0
assets)
</TABLE>
4. INVESTMENT SECURITIES
The amortized cost and approximate market value of securities available for sale
and trading securities are summarized as follows:
<TABLE>
<CAPTION>
April 30, 1997
---------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------ ------------ ------------ ------------
(000's omitted)
<S> <C> <C> <C> <C>
Securities available for sale
Debt securities:
U.S. Government and agencies $ 140,158 $ 197 $ 226 $ 140,129
State and municipals-
GNMA, FNMA and FHLMC mortgage 395,026 5,998 1,797 399,227
participation certificates
Agency CMOs 50,216 - 321 49,895
Privately issued CMOs 45,939 22 595 45,366
Other 1,122 - 12 1,110
------------ ------------ ------------ ------------
632,461 6,217 2,951 635,727
------------ ------------ ------------ ------------
Marketable Equity Securities:
Common Stock $ 4,898 $ 709 $ 361 $ 5,246
Preferred Stock 10,511 195 25 10,681
IIMF Capital App 22,967 2,865 - 25,832
------------ ------------ ------------ ------------
38,376 3,769 386 41,759
------------ ------------ ------------ ------------
Total Securities Available for
Sale 670,837 9,986 3,337 677,486
Trading Securities
- ------------------
Adjustable Rate and Intermediate Mortgage Fund 14,637 - 231 14,406
------------ ------------ ------------ ------------
Total Trading Securities $ 685,474 $ 9,986 $ 3,568 $ 691,892
============ ============ ============ ============
<CAPTION>
December 31, 1996
---------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------ ------------ ------------ ------------
(000's omitted)
<S> <C> <C> <C> <C>
Debt securities:
U.S. Government and agencies $ 141,833 $ 821 $ (101) $ 142,553
State and municipals 3,045 30 - 3,075
GNMA, FNMA and FHLMC mortgage participation
certificates
408,424 6,578 (502) 414,500
Agency CMOs 33,956 104 (4) 34,056
Privately issued CMOs 49,495 75 (326) 49,244
Other 3,841 - (16) 3,825
------------ ------------ ------------ ------------
</TABLE>
F-11
<PAGE> 217
<TABLE>
<CAPTION>
December 31, 1996
---------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------ ------------ ------------ ------------
(000's omitted)
<S> <C> <C> <C> <C>
640,594 7,608 (949) 647,253
------------ ------------ ------------ ------------
Marketable equity securities:
Common stocks $ 1 $ 352 $ - $ 353
Preferred stocks 10,682 150 (47) 10,785
IIMF capital appreciation 22,914 1,400 (124) 24,190
Adjustable rate and intermediate mortgage
funds 21,000 - (447) 20,553
------------ ------------ ------------ ------------
54,597 1,902 (618) 55,881
------------ ------------ ------------ ------------
Total securities available for
sale $ 695,191 $ 9,510 $ (1,567) $ 703,134
============ ============ ============ ============
<CAPTION>
December 31, 1995
---------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Market
Cost Gains Losses Value
------------ ------------ ------------ ------------
(000's omitted)
<S> <C> <C> <C> <C>
Debt securities:
U.S. Government and agencies $ 230,648 $ 2,849 $ (73) $ 233,424
State and municipals 3,115 73 - 3,188
Utilities 3,128 96 - 3,224
Corporate 60,600 663 (58) 61,205
GNMA, FNMA and FHLMC mortgage participation
certificates 434,897 6,594 (658) 440,833
Other 4,551 164 (24) 4,691
------------ ------------ ------------ ------------
736,939 10,439 (813) 746,565
------------ ------------ ------------ ------------
Marketable equity securities:
Common stocks 21,033 607 (1,235) 20,405
Preferred stocks 808 34 (50) 792
Adjustable rate and intermediate mortgage
funds 21,000 - (140) 20,860
------------ ------------ ------------ ------------
42,841 641 (1,425) 42,057
------------ ------------ ------------ ------------
Total securities available for
sale $ 779,780 $ 11,080 $ (2,238) $ 788,622
============ ============ ============ ============
</TABLE>
The amortized cost and market value of debt securities available for sale at
December 31, 1996 and 1995, by contractual maturity, are shown below. Expected
maturities will differ from contractual maturities because borrowers may have
the right to call or prepay obligations with or without call or prepayment
penalties.
<TABLE>
<CAPTION>
April 30, 1997 December 31, 1996 December 31, 1995
----------------------- ------------------------ -------------------------
Amortized Market Amortized Market Amortized Market
Cost Value Cost Value Cost Value
--------- --------- --------- ---------- ---------- ----------
(000's omitted)
<S> <C> <C> <C> <C> <C> <C>
Due in one year or less $ 30,338 $ 30,409 $ 22,995 $ 23,008 $ 77,890 $ 78,100
Due after one year through five
years 70,020 69,998 94,056 94,652 191,822 194,807
Due after five years through ten
years 40,922 40,832 25,917 26,012 29,122 29,545
Due after ten years - - 3,045 3,075 3,208 3,280
--------- --------- --------- ---------- ---------- ----------
141,280 141,239 146,013 146,747 302,042 305,732
GNMA, FNMA and FHLMC mortgage
participation certificates 491,181 494,488 494,581 500,506 434,897 440,833
--------- --------- --------- ---------- ---------- ----------
$ 632,461 $ 635,727 $ 640,594 $ 647,253 $ 736,939 $ 746,565
========= ========= ========= ========== ========== ==========
</TABLE>
F-12
<PAGE> 218
Proceeds from sales of securities available for sale during the four-month
periods ended April 30, 1997 and 1996 were $19,132,000 and $11,606,000 with
realized gross gains of $30,000 and $257,000 and realized gross losses of
$306,000 and $39,000, respectively.
Proceeds from sales of securities available for sale during 1996, 1995 and 1994
were $224,320,000, $115,597,000 and $11,029,000 with realized gross gains of
$488,000, $181,000 and $60,000 and realized gross losses of $3,198,000, $486,000
and $547,000, respectively.
Other
Under a securities lending agreement, the Bank's investment custodian made loans
of the Bank's available for sale securities with a market value of approximately
$17,800,000, $24,200,000 and $21,796,000 as of April 30, 1997, December 31, 1996
and 1995, respectively. Cash collateral received for such loans exceeded 100% of
the market value of all loaned securities.
5. LOANS, NET
A significant portion of the Bank's loans are to borrowers who are domiciled on
Staten Island. The income of many of those customers is dependent on the New
York City economy. In addition, most of the Bank's real estate loans involve
mortgages on Staten Island properties. Thus, the Bank's loan portfolio is
susceptible to the economy of Staten Island, a borough of New York City, which
is its primary market place.
While management uses available information to provide for losses of value on
loans and foreclosed properties, future loss provisions may be necessary based
on changes in economic conditions. In addition, the Bank's regulators, as an
integral part of their examination process, periodically review the valuation of
the Bank's loans and foreclosed properties. Such regulators may require the Bank
to recognize write-downs based on judgments different from those of management.
F-13
<PAGE> 219
Loans, net consist of the following at April 30, 1997, December 31, 1996 and
1995:
<TABLE>
<CAPTION>
December 31
April 30 ---------------------------
1997 1996 1995
------------ ------------ ------------
(000's omitted)
<S> <C> <C> <C>
Loans secured by mortgages on real estate:
1-4 family residential $ 755,497 $ 720,873 $ 594,911
Multifamily properties 28,983 26,444 25,977
Commercial properties 112,270 115,593 98,462
Home equity 29,935 29,680 25,246
Construction and land 31,417 28,779 18,661
Less- Deferred origination fees and unearned
income, net (4,216) (6,788) (6,212)
------------ ------------ ------------
Net loans secured by mortgages on real estate 953,886 914,581 757,045
------------ ------------ ------------
Other loans:
Student 4,999 4,522 6,072
Automobile leases - 28,249 18,705
Passbook 6,382 5,933 5,683
Discounted loans 7,118 6,731 5,528
Commercial business loans 8,266 8,264 9,729
Other 10,537 9,712 9,079
------------ ------------ ------------
Net other loans 37,302 63,411 54,796
------------ ------------ ------------
Net loans before the allowance for possible
loan losses 991,188 977,992 811,841
Allowance for possible loan losses (14,687) (9,977) (10,704)
------------ ------------ ------------
Net loans $ 976,501 $ 968,015 $ 801,137
============ ============ ============
</TABLE>
A summary of activity in the allowance for possible loan losses for the four
months ended April 30, 1997, and 1996 and for the years ended December 31, 1996
and 1995, is as follows:
<TABLE>
<CAPTION>
April 30 December 31
------------------------ ---------------------------------------
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ----------
(000's omitted)
<S> <C> <C> <C> <C> <C>
Beginning balance $ 9,977 $ 10,704 $ 10,704 $ 3,124 $ 3,180
Increase as a result of acquisition - - - 8,026 -
Provision charged to operations 4,667 - 1,000 - 76
Charge-offs (405) (70) (2,695) (782) (418)
Recoveries 448 547 968 336 286
---------- ---------- ---------- ---------- ----------
Ending balance $ 14,687 $ 11,181 $ 9,977 $ 10,704 $ 3,124
========== ========== ========== ========== ==========
</TABLE>
Nonaccrual loans totaled approximately $24,415,000 and $22,751,000 at April 30,
1997 and December 31, 1996, which is also the Bank's recorded investment in
loans for which impairment has been recognized in accordance with SFAS No. 114
and SFAS No. 118. Nonaccrual loans totaled approximately $24,215,000 at December
31, 1995. The loss of interest income associated with loans on nonaccrual status
was approximately $507,000 and $409,000 for the four months ended April 30, 1997
and 1996 and $696,000, $727,000 and $397,000 for the years ended December 31,
1996, 1995 and 1994, respectively.
At April 30, 1997 and December 31, 1996, the general valuation allowance
allocated to all impaired loans
F-14
<PAGE> 220
totaled $7,074,000 and $5,609,000, respectively, and is included in the
allowance for loan losses shown on the balance sheets. The average recorded
investment in impaired loans for the four-month periods ended April 30, 1997
and 1996 was approximately $23,572,000 and $24,872,000 respectively. The
average recorded investment in impaired loans for the twelve months ended
December 31, 1996, was approximately $24,763,000.
At April 30, 1997, December 31, 1996 and 1995, the Bank has other real estate
totaling approximately $1,317,000, $1,103,000 and $628,000, respectively,
classified in other assets.
At April 30, 1997, December 31, 1996 and 1995, the Bank was servicing mortgages
for others totaling approximately $149,425,000 and $148,422,000 and
$160,219,000, respectively.
At April 30, 1997, December 31, 1996 and 1995, the Bank has balances outstanding
from various officers totaling approximately $2,559,000 and $2,424,000 and
$2,082,000, respectively.
6. BANK PREMISES AND EQUIPMENT
Bank premises and equipment at April 30, 1997, December 31, 1996 and 1995, are
summarized as follows:
<TABLE>
<CAPTION>
December 31
April 30 -------------------------
1997 1996 1995
---------- ----------- ----------
(000's omitted)
<S> <C> <C> <C>
Land, building and leasehold improvements $ 20,122 $ 19,969 $ 18,580
Furniture, fixtures and equipment 11,958 10,928 8,869
---------- ---------- ----------
32,080 30,897 27,449
Less- Accumulated depreciation and amortization (12,559) (12,222) (10,769)
---------- ---------- ----------
$ 19,521 $ 18,675 $ 16,680
========== ========== ==========
</TABLE>
7. DUE DEPOSITORS
Scheduled maturities of time deposits at April 30, 1997 and December 31, 1996,
are summarized as follows (000's omitted):
<TABLE>
<CAPTION>
April 30 1997 December 31 1996
------------- ----------------
<S> <C> <C>
1997 $326,080 $ 381,740
1998 151,733 75,119
1999 20,228 17,255
2000 20,778 20,643
2001 and thereafter 8,769 5,813
--------- -----------
$527,588 $ 500,570
========= ===========
</TABLE>
The aggregate amounts of outstanding time certificates of deposit in
denominations of $100,000 or more at April 30, 1997, December 31, 1996 and 1995,
were approximately $108,074,000, $98,204,000 and $77,880,000, respectively.
F-15
<PAGE> 221
8. ACCOUNTING FOR PENSION COSTS AND
OTHER POSTRETIREMENT BENEFITS
The pension and postretirement benefit plans of Gateway Bancorp, Inc. were
terminated upon the Bank's acquisition of Gateway. The assets of these plans and
the accrued benefits attributable to former Gateway employees were rolled into
the Bank's existing plans.
Pension Plan
The Bank maintains a noncontributory defined benefit pension plan (the "Plan")
covering substantially all full-time employees 21 years of age or older. The
benefits are computed as 2% of the highest three-year average annual earnings
multiplied by credited service, to a maximum of 60% of average annual earnings.
The annual benefit is reduced by 5% for each year the benefit payments commence
before age 65. The amounts contributed to the Plan are determined annually on
the basis of (a) the maximum amount that can be deducted for federal income tax
purposes, or (b) the amount certified by a consulting actuary as necessary to
avoid an accumulated funding deficiency in accordance with federal law and
regulations. Contributions are intended to provide not only for benefits
attributed to service to date but also for those expected to be earned in the
future. Assets of the Plan are primarily invested in various equity and fixed
income funds.
Costs of the Bank's retirement plan are accounted for in accordance with SFAS
No. 87. The following table sets forth the Plan's funded status and amounts
recognized in the Bank's financial statements at April 30, 1997, December 31,
1996 and 1995, based upon the latest available actuarial measurement dates of,
September 30, 1996 and 1995, respectively.
<TABLE>
<CAPTION>
December 31
April ------------------------
1997 1996 1995
---------- ---------- ----------
(000's omitted)
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation, including vested benefits
of $13,416, $13,240 and $11,584, respectively $ 13,654 $ 13,948 $ 12,201
========== ========== ==========
Projected benefit obligation for service rendered to date $ 16,884 $ 17,237 $ 15,057
Plan assets at fair value 20,108 18,582 15,638
---------- ---------- ----------
Plan assets in excess of projected benefit obligation 3,224 1,345 581
Amount contributed during fourth quarter 1996 330 330 220
Unrecognized net (asset) at transition being recognized over
11.08 years (277) (320) (449)
Unrecognized past service liability 471 486 (275)
Unrecognized net (gain) loss (2,342) (551) 425
---------- ---------- ----------
Prepaid pension cost $ 1,406 $ 1,290 $ 502
========== ========== ==========
</TABLE>
F-16
<PAGE> 222
<TABLE>
<CAPTION>
For the Four Months For the Years December 31
Ended April 30 ------------------------------------
-----------------------
1997 1996 1996 1995 1994
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net pension cost included the following components:
Service cost-benefits earned during the $ 327 $ 303 $ 908 $ 555 $ 599
period
Interest cost on projected benefit
obligation 414 402 1,206 911 768
Actual return on plan assets (1,147) (925) (2,275) (2,398) (6)
Amortization of-
Unrecognized past service liability 16 15 48 (27) 3
Unrecognized transition asset (43) (43) (129) (129) (129)
Deferred investment gain 647 503 1,007 1,476 (928)
---------- ---------- ---------- ---------- ----------
Net pension cost included in $ 214 $ 255 $ 765 $ 388 $ 307
personnel expenses ========== ========== ========== ========== ==========
</TABLE>
Major assumptions utilized:
<TABLE>
<CAPTION>
December 31
April 30 ----------------
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
Discount rate 7.75% 7.50% 7.50%
Rate of increase in compensation levels 5.50 5.50 5.50
Expected long-term rate of return on Plan assets 8.00 8.00 8.00
</TABLE>
Postretirement Benefits
The Bank provides postretirement benefits, including medical care and life
insurance, which cover substantially all active employees upon their retirement.
The following table reconciles the Plan's status to the accrued postretirement
benefit cost included in other liabilities on the statements of condition as of
April 30, 1997, December 31, 1996 and 1995:
<TABLE>
<CAPTION>
December 31
April 30 ----------------------
1997 1996 1995
------- --------- ---------
(000's omitted)
<S> <C> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 2,069 $ 2,084 $ 1,864
Other fully eligible participants 2,065 1,954 3,448
Unrecognized (loss) (941) (954) (1,263)
Unrecognized past service liability 707 732 (486)
------- --------- ---------
Accrued postretirement benefit cost $ 3,900 $ 3,816 $ 3,563
======= ========= =========
</TABLE>
F-17
<PAGE> 223
Net periodic postretirement benefit cost for 1996 and 1995 included the
following components:
<TABLE>
<CAPTION>
For the Four
Months Ended For the Years Ended
April 30 December 31
--------------------- --------------------------------
1997 1996 1996 1995 1994
--------- --------- --------- --------- --------
(000's omitted)
<S> <C> <C> <C> <C> <C>
Service cost - benefits attributed to service $ 58 $ 58 $ 175 $ 219 $ 103
during period
Interest cost on accumulated postretirement 106 99 297 346 209
benefit obligation
Amortization of:
Unrecognized loss 13 17 51 22 -
Unrecognized past service liability (25) (25) (75) 11 -
--------- --------- --------- --------- ---------
Net periodic postretirement $ 152 $ 149 $ 448 $ 598 $ 312
benefit cost ========= ========= ========= ========= =========
</TABLE>
The average health care cost trend rate assumption significantly affects the
amounts reported. For example, a 1% increase in this rate would increase the
accumulated benefit obligation by $131,000, $128,200 and $319,000 at April 30,
1997, December 31, 1996 and 1995, respectively, and increase the net periodic
cost by $8,000 $7,000, $18,000 and $200 for the periods ended April 30, 1997,
December 31, 1996, 1995 and 1994, respectively. The postretirement benefit cost
components for 1996 were calculated assuming average health care cost trend
rates ranging up to 10.5% and grading to 5.5% in 2005 and thereafter.
401(k) Plan
The Bank has a 401(k) plan (the "Plan") covering substantially all full-time
employees. The Plan provides for employer matching contributions subject to a
specified maximum, and also contains a profit-sharing feature which provides for
contributions at the discretion of the Bank. Amounts charged to operations for
the four-month periods ended April 30, 1997 and 1996, were approximately
$513,000 and $461,000, respectively. Amounts charged to operations for the years
ended December 31, 1996, 1995 and 1994 were approximately $1,427,000, $1,142,000
and $815,000, respectively.
Supplemental Executive Retirement Plan
In 1993, the Bank adopted a Supplemental Executive Retirement Plan (the
"Executive Plan") for certain senior officers that provides for payments upon
retirement, death or disability. The annual benefit is based upon annual salary
(as defined) plus interest. Amounts charged to operations for the four-month
periods ended April 30, 1997 and 1996, were approximately $60,000 and $28,500,
respectively. Amounts charged to operations for the years ended December 31,
1996, 1995 and 1994 were approximately $255,000, $54,000 and $51,000,
respectively.
F-18
<PAGE> 224
9. INCOME TAXES
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
For the Four-Months Ended For the Years Ended December 31
April 30 -----------------------------------------
-----------------------
1997 1996 1996 1995 1994
-------- -------- -------- ---------- ------------
(000's omitted)
<S> <C> <C> <C> <C> <C>
Current:
Federal $ 4,235 $ 3,443 $ 11,213 $ 9,242 $ 8,091
New York State 1,068 855 2,489 2,865 2,771
New York City (1,589) 739 3,294 2,780 2,664
-------- -------- -------- ---------- ----------
3,714 5,037 16,996 14,887 13,526
Deferred (2,135) (322) (1,915) (1,603) 432
-------- -------- -------- ---------- ----------
$ 1,579 $ 4,715 $ 15,081 $ 13,284 $ 13,958
======== ======== ======== ========== ==========
</TABLE>
The following table reconciles the federal statutory rate to the Bank's
effective tax rate (000's omitted):
<TABLE>
<CAPTION>
For the Four-Months December 31, 1996
Ended April 30 --------------------------------------
--------------------------- Percentage of
1997 1996 Amount Pretax Income
------------ ----------- -------------- --------------------
<S> <C> <C> <C> <C>
Federal tax at statutory rate $ 2,963 $ 4,054 $ 13,022 35.0%
State and local income taxes, net of (1,555) 997 1,781 4.8
federal tax benefit
Tax-exempt interest from obligations of
state and political subdivisions -- 23 (69) (.2)
Amortization of goodwill 106 129 308 .8
Other 65 (488) 39 .1
----------- ----------- ---------- ----
Income tax provision $ 1,579 $ 4,715 $ 15,081 40.5%
=========== =========== ========== ====
</TABLE>
<TABLE>
<CAPTION>
December 31, 1995
---------------------------------
Percentage of
Amount Pretax Income
--------------- -------------
<S> <C> <C>
Federal tax at statutory rate $ 10,923 35.0%
State and local income taxes, net of federal tax benefit 2,872 9.2
Tax-exempt interest from obligations of state and political subdivisions (101) (.3)
Other (410) (1.3)
---------- ----
Income tax provision $ 13,284 42.6%
========== ====
<CAPTION>
December 31, 1994
---------------------------------
Percentage of
Amount Pretax Income
--------------- -------------
<S> <C> <C>
Federal tax at statutory rate $ 10,564 35.0%
State and local income taxes, net of federal tax benefit 3,533 11.7
Tax-exempt interest from obligations of state and political subdivisions (84) (.3)
Other (55) (.1)
---------- ----
Income tax provision $ 13,958 46.3%
========== ====
</TABLE>
F-19
<PAGE> 225
The following is a summary of the income tax (liability) receivable at April 30,
1997, December 31, 1996 and 1995 (000's omitted):
<TABLE>
<CAPTION>
December 31
April 30 ----------------------------
1997 1996 1995
------- ---------- ----------
<S> <C> <C> <C>
Current taxes $(1,962) $ 632 $ (574)
Deferred taxes 908 (4,248) (6,370)
------- ---------- ----------
$(1,054) $ (3,616) $ (6,944)
======= ========== ==========
</TABLE>
The components of the net deferred tax (liability) asset at April 30, 1997,
December 31, 1996 and 1995, are as follows (000's omitted):
<TABLE>
<CAPTION>
Deferred tax assets 4/30/97 12/31/96 12/31/95
------- -------- --------
<S> <C> <C> <C>
Allowance for Loan Losses $ 7,029 $ 4,789 $ 3,235
Post Retirement Accrual 1,861 1,815 1,710
Nonaccrual Loans 1,015 957 967
Deferred Compensation 830 762 608
Deferred Loan Fees 571 581 775
Other 1,781 1,468 1,345
---------- ---------- ----------
Gross Deferred Tax Asset 13,033 10,372 8,640
Valuation Allowance - - -
---------- ---------- ----------
Total Deferred Tax Asset 13,033 10,372 8,640
Deferred tax liabilities
Bad Debt Recapture Under Section 593 2,950 5,550 7,650
Deposit Premium 2,427 2,613 3,168
Unrealized Gain on AFS Securities 3,191 3,813 3,904
Purchase accounting and other 3,063 2,208 47
Pension Plan 494 436 241
---------- ---------- ----------
Gross Deferred Tax Liability 12,125 14,620 15,010
Net Deferred Tax Asset (Liability) $ 908 $ (4,248) $ (6,370)
========== ========== ==========
</TABLE>
At April 30, 1997 the deferred tax asset is included in other assets. The
deferred tax liability as of December 31, 1996 and 1995 is included in other
liabilities.
Income taxes are deferred as a result of differences in the timing of the
recognition of certain income and expense items for income tax and financial
reporting purposes. The primary sources of these differences are unrealized
appreciation/depreciation on securities available for sale, post retirement
benefits, deferred loan fees, accelerated tax depreciation, bond discount
amortization, deferred trustee fees, nonaccrual interest, bad debt deductions,
and book-tax differences resulting from the Gateway Bancorp, Inc. acquisition.
Bad Debt Deduction
Through January 1, 1996, under Section 593 of the Internal Revenue Code, thrift
institutions such as the Bank which met certain definitional tests, primarily
relating to their assets and the nature of their business, were permitted to
establish a tax reserve for bad debts and to make annual additions thereto,
which additions may, within specified limitations, be deducted in arriving at
their taxable income. The Bank's deduction with respect to "qualifying loans,"
which are generally loans secured by certain interests in real property, was
computed using an amount based on the Bank's actual loss experience (the
"Experience Method"), or a percentage equal to 8% of the Bank's taxable income
(the "PTI Method"), computed without regard to this deduction and with
additional modifications and reduced by the amount of any permitted addition to
the nonqualifying reserve. Similar deductions or additions to the Bank's bad
debt reserve are permitted under the New York State Bank Franchise Tax and New
York City Corporate Tax; however, for purposes of these taxes, the effective
allowable percentage under the PTI Method was approximately 32% rather than 8%.
Effective January 1, 1996, Section 593 was amended, and the Bank is unable to
make additions to its federal tax bad debt reserve, is permitted to deduct bad
debts only as they occur and is additionally required to recapture (that is,
take into taxable income) over a six year period,
F-20
<PAGE> 226
beginning with the Bank's taxable year beginning on January 1, 1996, the excess
of the balance of its bad debt reserves as of December 31, 1995 over the balance
of such reserves as of December 31, 1987, or over a lesser amount if the Bank's
loan portfolio has decreased since December 31, 1987. Such recapture
requirements would be deferred for each of the two successive taxable years
beginning January 1, 1996, in which the Bank originates a minimum amount of
certain residential loans based upon the average of the principal amounts of
such loans originated by the Bank during its six taxable years preceding January
1, 1996. The New York State tax law has been amended to prevent a similar
recapture of the Bank's bad debt reserve, and to permit continued future use of
the bad debt reserve method for purposes of determining the Bank's New York
State tax liability. In connection with this change, which also provides for an
indefinite deferral of the recapture of the bad debt reserves generated for New
York State purposes, the Bank reversed $2.1 million of previously deferred
income taxes related to the bad debt reserves accumulated for New York State
purposes. The New York City tax law was amended in the first quarter of 1997 to
prevent a similar recapture of the Bank's bad debt reserve, and to permit future
use of the experience method for purposes of determining the Bank's New York
change, which also provided for an indefinite deferral of the recapture of the
bad debt reserves generated for New York City purposes, the Bank reversed $2.6
million of previously deferred income taxes related to the bad debt reserves
accumulated for New York City purposes. The amount of the bad debt reserve
recapture amount for federal tax purposes is $2.9 million, which is included in
the gross deferred tax liability.
Prior to the tax law changes mentioned above, for New York State and New York
City purposes, the bad debt deduction was equal to a multiple of the federal bad
debt deduction, which is approximately four times the federal amount. In 1995,
the Bank began providing for deferred taxes on this state and city deduction
which has accumulated since 1987 (the base year as defined by SFAS No. 109,
"Accounting for Income Taxes"). The cumulative effect of this change in
accounting principle was approximately $4,700,000 and is reflected on the
statement of income.
10. COMMITMENTS AND CONTINGENCIES
AND RELATED PARTY TRANSACTIONS
In the normal course of business, there are various outstanding commitments and
contingent liabilities, such as standby letters of credit and commitments to
extend credit, which are not reflected in the accompanying financial statements.
The Bank uses the same policies in making commitments as it does for on-balance
sheet instruments. No material losses are anticipated as a result of these
transactions. The Bank is contingently liable under standby letters of credit in
the amount of $1,293,000, $1,424,000 and $1,597,000 at April 30, 1997, December
31, 1996 and 1995, respectively. In addition, at April 30, 1997, December 31,
1996 and 1995, mortgage loan commitments and unused balances under revolving
credit lines approximated $57,013,000, $54,260,000 and $18,308,000,
respectively.
F-21
<PAGE> 227
Total operating rental commitments on branch facilities, which expire at various
dates through September 2005, exclusive of renewal options, are as follows as of
April 30, 1997 (000's omitted):
<TABLE>
<S> <C>
1997 $ 617
1998 623
1999 564
2000 390
2001 and thereafter 1,186
---------
$ 3,380
=========
</TABLE>
Rental expense included in the statements of income was approximately $230,000
and $238,000 for the four-month periods ended April 30, 1997 and 1996.
Rental expense included in the statements of income was approximately $708,000,
$452,000 and $282,000 for the years ended December 31, 1996, 1995 and 1994,
respectively.
In 1973, the Bank entered into an agreement with a company to provide data
processing services. Such agreement expires in May 1998. The commitment for
future payments fluctuates with the level of service provided. The costs
incurred in connection with this agreement are included in data processing
expenses in the accompanying statements of income.
11. DISCLOSURES ABOUT FAIR VALUE
OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that
value:
Cash and Due from Banks
and Federal Funds Sold
For these short-term instruments, the carrying amount is a reasonable
estimate of fair value.
Accrued Interest
The carrying amount is a reasonable estimate of fair value.
Securities Available for Sale
Fair values for securities are based on quoted market prices or dealer
quotes. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities.
Loans
For certain homogeneous categories of loans, such as some residential
mortgages and other consumer loans, fair value is estimated using the
quoted market prices for securities backed by similar loans, adjusted
for differences in loan characteristics.
For other loan types, fair value is based on the credit and interest
rate characteristics of individual loans. These loans are stratified by
type, maturity, interest rate, underlying collateral where applicable,
and credit quality ratings. Fair value is estimated by discounting
scheduled cash flows through estimated maturities using discount rates
which
F-22
<PAGE> 228
in management's opinion best reflect current market interest rates that
would be charged on loans with similar characteristics and credit
quality. Credit risk concerns are reflected by adjusting cash flow
forecasts, by adjusting the discount rate or by adjusting both.
Deposit Liabilities
The fair value of demand deposits, savings accounts, and certain money
market deposits is the amount payable on demand at the reporting date.
The fair value of fixed-maturity certificates of deposit is estimated
using the rates currently offered for deposits of similar remaining
maturities.
Demand deposits, savings accounts and certain money market deposits are
valued at their carrying values. In the Bank's opinion, these deposits
could be sold at a premium based on management's knowledge of the
results of recent sales of financial institutions in the New York City
area.
Advances from Borrowers for Taxes and Insurance
The carrying amount is a reasonable estimate of fair value.
Commitments to Extend Credit
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness of
the counterparties.
The estimated fair values of the Bank's financial instruments are as
follows:
<TABLE>
<CAPTION>
April 30, 1997
------------------------------
Carrying Fair
Amount Value
------------ -------------
(000's omitted)
<S> <C> <C>
Financial assets:
Cash and due from banks $ 39,594 $ 39,594
Federal funds sold 74,150 74,150
Securities available for sale 677,486 677,486
Trading securities 14,406 14,406
Loans 991,188 1,002,096
Less- Allowance for possible loan losses (14,687) -
Accrued interest receivable 11,892 11,892
Financial liabilities:
Savings and demand deposits 1,079,205 1,079,205
Time deposits 527,588 538,584
Advances from borrowers for taxes and insurance 6,940 6,940
Accrued interest payable 2,245 2,245
Unrecognized financial instruments:
Commitments to extend credit - 147
</TABLE>
F-23
<PAGE> 229
<TABLE>
<CAPTION>
December 31, 1996
------------------------------
Carrying Fair
Amount Value
------------ -------------
(000's omitted)
<S> <C> <C>
Financial assets:
Cash and due from banks $ 43,522 $ 43,522
Federal funds sold 9,100 9,100
Securities available for sale 703,134 703,134
Loans 968,015 980,643
Less- Allowance for possible loan losses (9,977) -
Accrued interest receivable 11,739 11,739
Financial liabilities:
Savings and demand deposits 832,582 832,582
Time deposits 500,570 507,543
Advances from borrowers for taxes and insurance 4,563 4,563
Accrued interest payable 34 34
Unrecognized financial instruments:
Commitments to extend credit - 145
<CAPTION>
December 31, 1995
------------------------------
Carrying Fair
Amount Value
------------ -------------
(000's omitted)
<S> <C> <C>
Financial assets:
Cash and due from banks $ 57,663 $ 57,663
Federal funds sold 19,600 19,600
Securities available for sale 788,622 788,622
Loans 811,841 809,031
Less- Allowance for possible loan losses (10,704) -
Accrued interest receivable 13,775 13,775
Financial liabilities:
Savings and demand deposits 1,068,255 1,068,255
Time deposits 467,362 468,264
Advances from borrowers for taxes and insurance 3,354 3,354
Accrued interest payable 47 47
Unrecognized financial instruments:
Commitments to extend credit - 122
</TABLE>
12. SUBSEQUENT EVENT
On January 1, 1997, Bank assumed the responsibility for operating the Savings
Bank Life Insurance ("SBLI") Department of the former Northside Savings Bank.
The Bank will now be an issuing bank for SBLI.
F-24
<PAGE> 230
13. EVENTS OCCURRING SUBSEQUENT TO THE DATE
OF THE AUDITOR'S REPORT (UNAUDITED)
(i) Conversion to Stock-Form of Ownership
On April 16, 1997, the Board of Directors of the Bank adopted a Plan of
Conversion to convert from mutual to stock form. As part of the conversion, the
Bank will form a holding company (the "Company") and will be incorporated under
Delaware law, for the purpose of acquiring and holding all of the outstanding
stock of the Bank.
At the time of conversion, the Bank will establish a liquidation account in an
amount equal to the retained earnings of the Bank as of the date of the most
recent financial statements contained in the final conversion prospectus. The
liquidation account will be reduced annually to the extent that eligible account
holders have reduced their qualifying deposits as of each anniversary date.
Subsequent increases will not restore an eligible account holder's interest in
the liquidation account. In the event of a complete liquidation, each eligible
account holder will be entitled to receive a distribution from the liquidation
account in an amount proportionate to the current adjusted qualifying balances
for accounts then held.
The Company may not declare or pay cash dividends on or repurchase any of its
shares of common stock if the effect thereof would cause stockholders' equity to
be reduced below applicable regulatory capital maintenance requirements, the
amount required for the liquidation account, or if such declaration and payment
would otherwise violate regulatory requirements.
Pursuant to the Plan of Conversion, the Company intends to establish a
Charitable Foundation (the "Foundation"), Employee Stock Ownership Plan
("ESOP"), Stock Option Plan, Recognition and Retention Plan, and Employee
Agreements as discussed below.
The Company proposes to fund the Foundation by contributing to the Foundation,
immediately following the Conversion, a number of shares of authorized but
unissued shares of Common Stock equal to 5.0% of the Common Stock sold in the
Offering. Such contribution, once made, will not be recoverable by the Company
or the Bank.
The Company plans to establish an ESOP, a tax-qualified benefit plan for
officers and employees of the Company and the Bank. It is anticipated that
8.0% of the shares of Common Stock sold in the Offering will be purchased by
the ESOP with funds loaned by the Company. The Company and the Bank intend to
make annual contributions to the ESOP in an amount equal to the principal and
interest requirement of the debt.
Following consummation of the Conversion, the Company intends to adopt a Stock
Option Plan and a Recogniation and Retention Plan, pursuant to which the
Company intends to reserve a number of shares of Common Stock equal to an
aggregate of 10% and 4%, respectively of the Common Stock issued in the
Conversion for issuance pursuant to stock options and stock appreciation rights
and stock. The Stock Option Plan and Recognition and Retention Plan will not
be implemented prior to receipt of stockholder approval of the Plan of
Conversion.
Upon consummation of the Conversion, the Company and the Bank intend to enter
into three-year employment agreements with certain Senior management personnel.
Conversion costs will be deferred and reduce the proceeds from the shares sold
in the Conversion. If the Conversion is not completed, all costs will be
charged as an expense. As of April 30, 1997, Conversion costs of approximately
$89,000 had been incurred.
(ii) Change to OTS Charter
Effective June 1997, the Bank converted to a Federal Charter and is regulated by
the Office of Thrift Supervision.
As required by the Office of Thrift Supervision ("OTS"), the Bank is required to
maintain minimum regulatory capital requirements which include a "leverage
limit," a "tangible capital requirement" and a "risk-based capital requirement."
The leverage limit requires a savings institution to maintain "core capital" in
an amount not less than 3% of the savings institution's "adjusted total assets."
The tangible capital requirements call for a savings institution to maintain
"tangible capital" in an amount not less than 1.5% of the savings institution's
"adjusted total assets." The ability to include qualifying supervisory goodwill
for purposes of the core capital requirement has been phased out as of January
1, 1995.
The risk-based capital requirement calls for a savings institution to maintain
capital in an amount equal to 8.0% of the value of its risk-weighted assets.
In December 1992, the prompt corrective action provision under the Federal
Deposit Insurance Corporation Improvement Act of 1991 became effective. Those
regulations established capital standards in five categories ranging from
"critically undercapitalized" to "well capitalized," and defined "adequately
capitalized" as at least 4% for core (leverage) capital. Institutions with a
core capital level less than 4% or risk-based capital less than 8% are
considered "undercapitalized," and subject to increasingly stringent prompt
corrective action measures.
The OTS has implemented an interest rate risk component into its risk-based
capital rules, which is designed to calculate on a quarterly basis the extent
to which the value of an institution's assets and liabilities would change if
interest rates increase or decrease. If the net portfolio value of an
institution would decline by more than 2% of the estimated market value of the
institution's assets in the event of a 200 basis point increase or decrease in
interest rates, then the institution is deemed to be subject to a greater than
normal interest rate risk and must deduct from its capital 50% of the amount by
which the decline in net portfolio value exceeds 2% of the estimated market
value of the institution's assets, as of an effective date to be determined.
F-25
<PAGE> 231
The Company's management believes that, under the current and proposed
regulations, the Bank will continue to meet its minimum capital requirements in
the foreseeable future. However, events beyond the control of the Company, such
as increased interest rates or a downturn in the economy in areas where the
Company has most of its loans, could adversely affect future earnings and,
consequently, the ability of the Bank to meet its future minimum capital
requirements.
The information below is based upon the Bank's understanding of the applicable
regulations and related interpretations.
At April 30, 1997, December 31, 1996 and 1995, the Bank had the following
capital ratios:
<TABLE>
<CAPTION>
April 30, 1997 December 31, 1996 December 31, 1995
------------------------------- ---------------------------------- -------------------------------
Actual % Required % Actual % Required % Actual % Required %
------- ----- ------ ---- ------- ----- ------ ---- ------- ----- ------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Tangible capital $154,040 8.44% $27,376 1.50% $146,460 8.33% $26,366 1.50% $122,542 7.21% $25,509 1.50%
Core capital 173,838 9.53 54,751 3.00 166,950 9.50 52,731 3.00 145,175 8.54 51,018 3.00
Risk-based capital 164,539 19.59 67,195 8.00 156,437 18.89 66,260 8.00 132,091 17.29 61,114 8.00
</TABLE>
The following is a reconciliation of the Bank's stockholders' equity to
regulatory capital:
<TABLE>
<CAPTION>
December 31
April 30, ------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Bank's stockholders' equity $177,295 $171,080 $150,082
Add (subtract)- Unrealized losses (gains) on securities available (3,457) (4,130) (4,907)
for sale ----------- ----------- -----------
OTS core capital $ 173,838 $ 166,950 $ 145,175
(subtract) Intangible Assets (19,798) (20,490) (22,633)
========== ========== ==========
OTS tangible capital $ 154,040 $ 146,460 $ 122,542
Add- Allowable supplementary capital-
General loan loss reserves on loans 10,499 9,977 9,549
---------- ---------- ----------
OTS risk-based capital $ 164,539 $ 156,437 $ 132,091
========== ========== ==========
</TABLE>
(iii) New Accounting Pronouncements
In March 1997, the Financial Accounting Standards Board (FASB) issued Statement
128, "Earnings per Share," superseding Opinion 15. The main goals of the
Statement is to harmonize the EPS calculation in the United States with those
common in other countries and with International Accounting Standard No. 33 and
to address criticisms from consultants that Opinion 15 contained unnecessarily
complex and arbitrary provisions. The Statement is effective for fiscal years
after December 15, 1997.
In March 1997, the FASB issued SFAS No. 129, "Disclosure of Information About
Capital Structure." Statement 129 continues the existing requirements to
disclose the pertinent rights and privileges of all securities other than
ordinary common stock but expands the number of companies subject to portions of
its requirements. Specifically, the Statement requires all entities to provide
the capital structure disclosures previously required by Opinion 15. Companies
that were exempt from the provisions of Opinion 15 will now need to make those
disclosures. The Statement is effective for financial statements for periods
ending after December 15, 1997.
In July 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive Income."
Statement 130 establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
The objective of the Statement is to report a measure of all changes in equity
of an enterprise that result from transactions and other economic
F-26
<PAGE> 232
events of the period other than transactions with owners ("Comprehensive
income"). Comprehensive income is the total of net income and all other nonowner
changes in equity. The Statement is effective for fiscal years beginning after
December 15, 1997 with earlier application permitted.
In July 1997, the FASB issued SFAS No. 131 "Disclosures About Segments of an
Enterprise and Related Information." Statement No. 131 requires disclosures for
each segment that are similar to those required under current standards with the
addition of quarterly disclosure requirements and a finer partitioning of
geographic disclosures. It requires limited segment data on a quarterly basis.
It also requires geographic data by country, as opposed to broader geographic
regions as permitted under current standards. The Statement is effective for
fiscal years beginning after December 15, 1997 with earlier application
permitted.
In management's opinion, SFAS Nos. 128, 129, 130 and 131 when adopted, will not
have a material effect on the Bank's financial statements.
F-27
<PAGE> 233
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE BANK OR KEEFE, BRUYETTE. THIS PROSPECTUS DOES NOT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY OR THE
BANK SINCE ANY OF THE DATES AS OF WHICH INFORMATION IS FURNISHED HEREIN OR
SINCE THE DATE HEREOF.
-----------------
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary . . . . . . . . . . . . . . . . . . . .
Selected Consolidated Financial and
Other Data . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . .
Staten Island Bancorp, Inc. . . . . . . . . . .
Staten Island Savings Bank . . . . . . . . . .
Use of Proceeds . . . . . . . . . . . . . . . .
Dividend Policy . . . . . . . . . . . . . . . .
Market for Common Stock . . . . . . . . . . . .
Regulatory Capital . . . . . . . . . . . . . .
Capitalization . . . . . . . . . . . . . . . .
Pro Forma Data . . . . . . . . . . . . . . . .
Comparison of Valuation and Pro Forma
Information With No Foundation . . . . . . . .
Statements of Income . . . . . . . . . . . . .
Management's Discussion and Analysis
of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . .
Business . . . . . . . . . . . . . . . . . . .
Regulation . . . . . . . . . . . . . . . . . .
Taxation . . . . . . . . . . . . . . . . . . .
Management . . . . . . . . . . . . . . . . . .
Proposed Management Purchases . . . . . . . . .
The Conversion . . . . . . . . . . . . . . . .
Restrictions on Acquisition of the
Company and the Bank . . . . . . . . . . . . .
Description of Capital Stock of the
Company . . . . . . . . . . . . . . . . . . .
Description of Capital Stock of the
Bank . . . . . . . . . . . . . . . . . . . . .
Transfer Agent and Registrar . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . .
Legal and Tax Opinions . . . . . . . . . . . .
Additional Information . . . . . . . . . . . .
Index to Financial Statements . . . . . . . . .
</TABLE>
UNTIL ________ __, 1997, OR 25 DAYS AFTER COMMENCEMENT OF THE SYNDICATED
COMMUNITY OFFERING, IF ANY, WHICHEVER IS LATER, ALL DEALERS EFFECTING
TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS
DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO
THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
35,595,238 SHARES
(ANTICIPATED MAXIMUM)
STATEN ISLAND BANCORP, INC.
(PROPOSED HOLDING COMPANY FOR
STATEN ISLAND SAVINGS BANK)
COMMON STOCK
--------------------------
PROSPECTUS
--------------------------
KEEFE, BRUYETTE & WOODS, INC.
______________ __, 1997
<PAGE> 234
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (1).
<TABLE>
<S> <C>
SEC filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 130,246
OTS filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,400
NYSE filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,000
Printing, postage and mailing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700,000
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 700,000
Blue Sky filing fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Accounting fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 375,000
Appraiser's fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
Fees and expenses related to business plan . . . . . . . . . . . . . . . . . . . . . . . 20,000
Conversion agent fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,000
Transfer agent fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Conversion center telephone, temporary support staff and equipment . . . . . . . . . . . 400,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121,354
---------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,000,000
=========
</TABLE>
In addition to the foregoing expenses, Keefe, Bruyette & Woods, Inc.
will receive fees based on the number of shares of Common Stock sold in the
Conversion, plus expenses. Based upon the assumptions and the information set
forth under "Pro Forma Data" and "The Conversion - Marketing Arrangements" in
the Prospectus, it is estimated that such fees will amount to $2,726,056,
$3,217,264, $3,708,472 and $4,273,370 in the event that 26,309,524 shares,
30,952,381 shares, 35,595,238 shares and 40,934,524 shares of Common Stock are
sold by the Bank in the Conversion, respectively.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law sets forth
circumstances under which directors, officers, employees and agents may be
insured or indemnified against liability which they may incur in their capacity
as such. The Certificate of Incorporation and the Bylaws of the Company
provide that the directors, officers, employees and agents of the Company shall
be indemnified to the full extent permitted by law. Such indemnity shall
extend to expenses, including attorney's fees, judgments, fines and amounts
paid in the settlement, prosecution or defense of the foregoing actions.
Article 10 of the Registrant's Certificate of Incorporation provides
as follows:
ARTICLE 10. INDEMNIFICATION. The Corporation shall indemnify its
directors, officers, employees, agents and former directors, officers,
employees and agents, and any other persons serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
association, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees, judgments, fines and amounts paid in
settlement) incurred in connection with any pending or threatened action, suit
or proceeding, whether civil, criminal,
<PAGE> 235
administrative or investigative, with respect to which such director, officer,
employee, agent or other person is a party, or is threatened to be made a
party, to the full extent permitted by the General Corporation Law of the State
of Delaware, provided, however, that the Corporation shall not be liable for
any amounts which may be due to any person in connection with a settlement of
any action, suit or proceeding effected without its prior written consent or
any action, suit or proceeding initiated by any person seeking indemnification
hereunder without its prior written consent. The indemnification provided
herein (i) shall not be deemed exclusive of any other right to which any person
seeking indemnification may be entitled under any bylaw, agreement or vote of
stockholders or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in any other capacity, and (ii) shall
inure to the benefit of the heirs, executors and administrators of any such
person. The Corporation shall have the power, but shall not be obligated, to
purchase and maintain insurance on behalf of any person or persons enumerated
above against any liability asserted against or incurred by them or any of them
arising out of their status as corporate directors, officers, employees, or
agents whether or not the Corporation would have the power to indemnify them
against such liability under the provisions of this Article 10.
Article VI of the Company's Bylaws provides as follows:
6.1 Indemnification. The Corporation shall provide indemnification
to its directors, officers, employees, agents and former directors, officers,
employees and agents and to others in accordance with the Corporation's
Certificate of Incorporation.
6.2 Advancement of Expenses. Reasonable expenses (including
attorneys' fees) incurred by a director, officer or employee of the Corporation
in defending any civil, criminal, administrative or investigative action, suit
or proceeding described in Section 6.1 may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors only upon receipt of an undertaking by or
on behalf of such person to repay such amount if it shall ultimately be
determined that the person is not entitled to be indemnified by the
Corporation.
6.3 Other Rights and Remedies. The indemnification and
advancement of expenses provided by, or granted pursuant to, this Article VI
shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under the
Corporation's Certificate of Incorporation, any agreement, vote of stockholders
or disinterested directors or otherwise, both as to actions in their official
capacity and as to actions in another capacity while holding such office, and
shall continue as to a person who has ceased to be a director, officer or
employee and shall inure to the benefit of the heirs, executors and
administrators of such person.
6.4 Insurance. Upon resolution passed by the Board of Directors,
the Corporation may purchase and maintain insurance on behalf of any person who
is or was a director, officer of employee of the Corporation, or is or was
serving at the request of the corporation as a director, officer or employee of
another corporation, partnership, joint venture, trust or other enterprise,
against any liability asserted against him or incurred by him in any such
capacity or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of its Certificate of Incorporation or this Article VI.
<PAGE> 236
6.5 Modification. The duties of the Corporation to indemnify and
to advance expenses to a director, officer or employee provided in this Article
VI shall be in the nature of a contract between the Corporation and each such
person, and no amendment or repeal of any provision of this Article VI shall
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.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Not applicable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES
The exhibits and financial statement schedules filed as a part of this
Registration Statement are as follows:
(a) LIST OF EXHIBITS (filed herewith unless otherwise noted)
1.1 Engagement Letter with Keefe, Bruyette & Woods, Inc.
1.2* Form of Agency Agreement with Keefe, Bruyette & Woods, Inc.
2.0 Plan of Conversion
3.1 Certificate of Incorporation of Staten Island Bancorp, Inc.
3.2 Bylaws of Staten Island Bancorp, Inc.
4.0 Form of Stock Certificate of Staten Island Bancorp, Inc.
5.0* Opinion of Elias, Matz, Tiernan & Herrick L.L.P. re: legality
8.1 Opinion of Elias, Matz, Tiernan & Herrick L.L.P. re: Federal tax
matters
8.2* Opinion of KPMG Peat Marwick re: New York tax matters
8.3 Letter of RP Financial, LC re: Subscription Rights
10.1 Form of Employment Agreement to be entered into among Staten Island
Bancorp, Inc., Staten Island Savings Bank and certain executive
officers.
10.2 Form of Employment Agreement to be entered into between Staten Island
Bancorp, Inc. and each of Harry P. Doherty and James R. Coyle.
10.3 Form of Employment Agreement to be entered into between Staten Island
Savings Bank and each of Harry P. Doherty and James R. Coyle
23.1 Consent of Elias, Matz, Tiernan & Herrick L.L.P. (included in Exhibits
5.0 and 8.1, respectively)
23.2 Consent of Arthur Andersen LLP
23.3 Consent of RP Financial, LC.
23.4* Consent of Potter Anderson Corroon
23.5* Consent of KPMG Peat Marwick
24.0 Power of Attorney (included in Signature Page of this Registration
Statement)
99.1 Appraisal Report of RP Financial, LC.
99.2 Subscription Order Form and Instructions
99.3 Additional Solicitation Material
99.4* Form of the SISB Foundation Gift Instrument
- -----------
* To be filed by amendment.
<PAGE> 237
(b) FINANCIAL STATEMENT SCHEDULES
All schedules have been omitted as not applicable or not required
under the rules of Regulation S-X.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any Prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the Prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of the securities offered would not exceed that which was
registered) and any deviation from the low or high and the estimated
maximum offering range may be reflected in the form of Prospectus
filed with the Commission pursuant to Rule 424 (b) if, in the
aggregate, the changes in volume and price represent no more than 20
percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the Offering.
The undersigned Registrant hereby undertakes to furnish stock
certificates to or in accordance with the instructions of the respective
purchasers of the Common Stock, so as to make delivery to each purchaser
promptly following the closing under the Plan of Conversion.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and
<PAGE> 238
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE> 239
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Form S-1 Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the State of New
York on July 24, 1997.
STATEN ISLAND BANCORP, INC.
By: /s/ HARRY P. DOHERTY
-------------------------------------
Harry P. Doherty
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below hereby makes, constitutes and appoints Harry P. Doherty his true and
lawful attorney, with full power to sign for each person and in such person's
name and capacity indicated below, and with full power of substitution, any and
all amendments to this Registration Statement, hereby ratifying and confirming
such person's signature as it may be signed by said attorney to any and all
amendments.
<TABLE>
<CAPTION>
Name Title Date
- --------------------------------- ---------------------------------------- -------------
<S> <C> <C>
/s/ HARRY P. DOHERTY Chairman and Chief Executive Officer July 24, 1997
--------------------------------
Harry P. Doherty
/s/ JAMES R. COYLE Director, President and Chief Operating July 24, 1997
-------------------------------- Officer
James R. Coyle
/s/ EDWARD J. KLINGELE Senior Vice President and Chief July 24, 1997
-------------------------------- Financial Officer (principal financial
Edward J. Klingele and accounting officer)
/s/ HAROLD BANKS Director July 22, 1997
--------------------------------
Harold Banks
/s/ CHARLES J. BARTELS Director July 24, 1997
--------------------------------
Charles J. Bartels
</TABLE>
<PAGE> 240
<TABLE>
<S> <C> <C>
/s/ WILLIAM G. HORN Director July 24, 1997
--------------------------------
William G. Horn
/s/ DENIS P. KELLEHER Director July 24, 1997
--------------------------------
Denis P. Kelleher
/s/ JULIUS MEHRBERG Director July 24, 1997
--------------------------------
Julius Mehrberg
/s/ JOHN R. MORRIS Director July 24, 1997
--------------------------------
John R. Morris
Director July __, 1997
--------------------------------
Kenneth W. Nelson
/s/ WILLIAM E. O'MARA Director July 24, 1997
--------------------------------
William E. O'Mara
</TABLE>
<PAGE> 1
Exhibit 1.1
[KEEFE, BRUYETTE & WOODS, INC. LETTERHEAD]
April 17, 1997
Mr. Harry P. Doherty
Chairman
Staten Island Savings Bank
15 Beach Street
Stapleton, New York 10304
Dear Mr. Doherty:
This proposal is in connection with Staten Island Savings Bank's (the "Bank")
intention to convert from a mutual to a capital stock form of organization (the
"Conversion"). In order to effect the Conversion, it is contemplated that all
of the Bank's common stock to be outstanding pursuant to the Conversion will be
issued to a holding company (the "Company") to be formed by the Bank, and that
the Company will offer and sell shares of its common stock first to eligible
persons (pursuant to the Bank's Plan of Conversion) in a Subscription Offering
and then in a Community Offering.
Keefe, Bruyette & Woods, Inc. (KBW) will act as the Bank's and the Company's
exclusive financial advisor and marketing agent in connection with the
Conversion. This letter sets forth selected terms and conditions of our
engagement.
1. Advisory/Conversion Services. As the Bank's and Company's financial
advisor and marketing agent, KBW will provide the Bank and the Company with a
comprehensive program of conversion services designed to promote an orderly,
efficient, cost-effective and long-term stock distribution. KBW will provide
financial and logistical advice to the Bank and the Company concerning the
offering and related issues. KBW will assist in providing of conversion
enhancement services intended to maximize stock sales in the Subscription
Offering and to residents of the Bank's market area, if necessary, in the
Community Offering.
KBW shall provide financial advisory services to the Bank which are typical in
connection with an equity offering and include, but are not limited to, overall
financial analysis of the client with a focus on identifying factors which
impact the valuation of an equity security and provide the appropriate
recommendations for the betterment of the equity valuation.
Additionally, post-conversion financial advisory services will be provided for
a one-year period, at no additional fee, including advice on shareholder
relations, NASDAQ listing, dividend policy,
<PAGE> 2
Mr. Harry P. Doherty
April 17, 1997
Page 2 of 6
stock repurchase strategy and communication with market makers. KBW will also
render general advice on mergers and acquisitions. However, should discussions
commence for a specific acquisition transaction by the Bank, KBW's financial
advisory relationship with respect to the specific transaction will terminate.
If the Bank wishes to have KBW initiate, negotiate, and/or process the specific
transaction, an appropriate fee will be negotiated at that time. Prior to the
closing of the offering, KBW shall furnish to client a post-conversion
reference manual which will include specifics relative to these items. (The
nature of the services to be provided by KBW as the Bank's and the Company's
financial advisor and marketing agent are further described in Exhibit A
attached hereto.)
2. Preparation of Offering Documents. The Bank, the Company and their
counsel will draft the Registration Statement, Application for Conversion,
Prospectus and other documents to be used in connection with the Conversion. KBW
will attend meetings to review these documents and advise you on their form and
content. KBW and their counsel will draft appropriate Agency Agreement and
related documents as well as marketing materials other than the Prospectus.
3. Due Diligence Review. Prior to filing the Registration Statement,
Application for Conversion or any offering or other documents naming KBW as the
Bank's and the Company's financial advisor and marketing agent, KBW and their
representatives will undertake substantial investigations to learn about the
Bank's business and operations ("due diligence review") in order to confirm
information provided to us and to evaluate information to be contained in the
Bank's and/or the Company's offering documents. The Bank agrees that it will
make available to KBW all relevant information, whether or not publicly
available, which KBW reasonably request, and will permit KBW to discuss
personnel and the operations and prospects of the Bank with management. KBW
will treat all material non-public information as confidential. The Bank
acknowledges that KBW will rely upon the accuracy and completeness of all
information received from the Bank, its officers, directors, employees, agents
and representatives, accountants and counsel including this letter of intent to
serve as the Bank's and the Company's financial advisor and marketing agent.
4. Regulatory Filings. The Bank and/or the Company will cause appropriate
offering documents to be filed with all regulatory agencies including, the
Securities and Exchange Commission ("SEC"), the National Association of
Securities Dealers ("NASD"), and such state securities commissioners as may be
determined by the Bank.
5. Agency Agreement. The specific terms of the conversion services, conversion
offering enhancement and syndicated offering services contemplated in this
letter shall be set forth in an Agency Agreement between KBW and the Bank and
the Company to be executed prior to commencement of the offering, and dated the
date that the Company's Prospectus is declared effective and/or authorized to be
disseminated by the appropriate regulatory agencies, the SEC, the NASD and such
state securities commissioners and other regulatory agencies as required by
applicable law.
<PAGE> 3
Mr. Harry P. Doherty
April 17, 1997
Page 3 of 6
6. Representations, Warranties and Covenants. The Agency Agreement will
provide for customary representations, warranties and covenants by the
Bank and KBW, and for the Company to indemnify KBW and their controlling
persons (and, if applicable, the members of the selling group and their
controlling persons), and for KBW to indemnify the Bank and the Company
against certain liabilities, including, without limitation, liabilities
under the Securities Act of 1933.
Since KBW will be acting on your behalf in connection with the Offerings,
the Bank agrees to indemnify and hold KBW, its affliates, directors,
officers, agents and employees, and each other person, if any, controlling
KBW, or any of its affiliates within the meaning of Section 15 of the
Securities Act of 1933 or Section 20(a) of the Securities Exchange Act of
1934, harmless from and against any losses, claims, damages, expenses
(including reasonable counsel fees), or liabilities and will further
promptly reimburse such persons for any legal or other expenses reasonably
incurred in investigating, preparing to defend or defending against any
such action, proceeding or claim (whether commenced or threatened) arising
out of or based upon any untrue or alleged untrue statement of a material
fact or the omission or alleged omission of a material fact required to be
stated in or necessary to make not misleading any statements contained in
the proxy statement used with respect to the meeting at which the
Conversion is approved, any Prospectus used in the Offerings or any
amendment or supplement thereof (each, a "Document") unless such untrue
statement or alleged untrue statement or omission or alleged omission was
made in or omitted from any Document in reliance upon and in conformity
with written information furnished to the Association by or on behalf of
KBW relating to KBW expressly for use therein. KBW agrees to indemnify
and hold harmless the Association and its affiliates, directors, officers,
agents and employees and each person, if any, controlling any such person
within the meaning of Section 15 of the Securities Exchange Act of 1934 to
the same extent as the foregoing indemnity from the Bank to KBW but only
with respect to information relating to KBW furnished to the Bank in
writing by it, or on its behalf, expressly for use in the Documents.
7. Fees. For the services hereunder, the Bank and/or Company shall pay the
following fees to KBW at closing unless stated otherwise:
(a) A Management Fee of $50,000 payable in four consecutive monthly
installments of $12,500 commencing with the signing of this letter.
Such fees shall be deemed to have been earned when due. Should the
Conversion be terminated for any reason not attributable to the
action or inaction of KBW, KBW shall have earned and be entitled to
be paid fees accruing through the stage at which point the
termination occurred.
<PAGE> 4
Mr. Harry P. Doherty
April 17, 1997
Page 4 of 6
(b) A Success Fee of 1.15% of the aggregate Purchase Price of Common Stock
sold in the Subscription Offering and Community Offering minus the
amounts previously paid to KBW pursuant to sub-paragraph (a) above
and excluding shares purchased by the Bank's officers, directors, or
employees (or members of their immediate families) plus any ESOP,
tax-qualified or stock based compensation plans (except IRA's) or
similar plan created by the Bank for some or all of its directors or
employees or by any charitable foundation established by the Bank.
(c) If any shares of the Company's stock remain available after the
subscription offering, at the request of the Bank, KBW will seek to
form a syndicate of registered broker-dealers to assist in the sale
of such common stock on a best efforts basis, subject to the terms
and conditions set forth in the selected dealers agreement. KBW will
endeavor to distribute the common stock among dealers in a fashion
which best meets the distribution objectives of the Bank and the Plan
of Conversion. KBW will be paid a fee not to exceed 5.5% of the
aggregate Purchase Price of the shares of common stock sold by them.
KBW will pass onto selected broker-dealers, who assist in the
syndicated community, an amount competitive with gross underwriting
discounts charged at such time for comparable amounts of stock sold
at a comparable price per share in a similar market environment. Fees
with respect to purchases affected with the assistance of a
broker/dealer other than KBW shall be transmitted by KBW to such
broker/dealer. THE DECISION TO UTILIZE SELECTED BROKER-DEALERS WILL BE
MADE BY THE BANK upon consultation with KBW. In the event, with
respect to any stock purchases, fees are paid pursuant to this
subparagraph 7(c), such fees shall be in lieu of, and not in addition
to, payment pursuant to subparagraph 7(a) and 7(b).
8. Expenses. The Bank will bear those expenses of the proposed offering
customarily borne by issuers, including, without limitation, regulatory filing
fees, SEC, "Blue Sky," and NASD filing and registration fees; the fees of the
Bank's accountants, attorneys, appraiser, conversion agent, transfer agent and
registrar, printing, mailing and marketing and syndicate expenses associated
with the Conversion; the fees set forth in Section 7; and fees for "Blue Sky"
legal work.
The Bank will also reimburse KBW for travel and accommodation expenses of its
personnel used in staffing the Conversion Center. KBW shall be reimbursed for
the reasonable fees and expenses of their Counsel. The selection of such
counsel will be done by KBW, with the approval of the Bank.
9. Conditions. KBW's willingness and obligation to proceed hereunder shall be
subject to, among other things, satisfaction of the following conditions in
KBW's opinion, which opinion shall have been formed in good faith by KBW after
reasonable determination and consideration of all relevant factors: (a) full
and satisfactory disclosure of all relevant material, financial and other
<PAGE> 5
Mr. Harry P. Doherty
April 17, 1997
Page 5 of 6
information in the disclosure documents and a determination by KBW, in their
sole discretion, that the sale of stock on the terms proposed is reasonable
given such disclosures; (b) no material adverse change in the condition or
operations of the Bank subsequent to the execution of the agreement; and (c) no
market conditions at the time of offering which in KBW's opinion make the sale
of the shares by the Company inadvisable.
10. Benefit. This Agreement shall inure to the benefit of the parties hereto
and their respective successors and to the parties indemnified hereunder and
their successors, and the obligations and liabilities assumed hereunder by the
parties hereto shall be binding upon their respective successors provided,
however, that this Agreement shall not be assignable by KBW.
11. Definitive Agreement. This letter reflects KBW's present intention of
proceeding to work with the Bank on its proposed Conversion. It does not create
a binding obligation on the part of the Bank, the Company or KBW except as to
the agreement to maintain the confidentiality of non-public information set
forth in Section 3, the payment of certain fees as set forth in Section 7(a)
and 7(b) and the assumption of expenses as set forth in Section 8, all of which
shall constitute the binding obligations of the parties hereto and which shall
survive the termination of this Agreement or the completion of the services
furnished hereunder and shall remain operative and in full force and effect.
You further acknowledge that any report or analysis rendered by KBW pursuant to
this engagement is rendered for use solely by the management of the Bank and its
agents in connection with the Conversion. Accordingly, you agree that you will
not provide any such information to any other person without our prior written
consent.
Such agreement shall be in form and content satisfactory to KBW and the Bank, as
well as their respective counsel, shall contain standard indemnification
provisions consistent herewith, and KBW's obligations hereunder shall be
subject to, among other things, there being, in KBW's opinion, which shall
have been formed in good faith by KBW after reasonable determination and
consideration of all relevant factors: (1) satisfactory disclosure of all
relevant financial information in the disclosure documents and a determination
that the sale of stock is reasonable given such disclosures, (2) no material
adverse change in the condition or operations of the Bank subsequent to the
performance of due diligence, (3) no market conditions which might render the
sale of the shares by the Bank hereby contemplated inadvisable, and (4)
agreement that the price established by the independent appraiser is reasonable
and equitable in the then prevailing market conditions.
KBW acknowledges that in offering the Company's stock no person will be
authorized to give any information or to make any representation not contained
in the offering Prospectus and related offering materials filed as part of a
Registration Statement to be declared effective in connection with the
offering. Accordingly, KBW agrees that in connection with the Offering it will
not give any unauthorized information or make any unauthorized representation.
We will be pleased to elaborate on any of the matters discussed in this letter
at your convenience.
<PAGE> 6
Mr. Harry P. Doherty
April 17, 1997
Page 6 of 6
If the foregoing correctly sets forth our mutual understanding, please so
indicate by signing and returning the original copy of this letter to the
undersigned.
Very truly yours,
KEEFE, BRUYETTE & WOODS, INC,
By: /s/ MICHAEL IANNACCONE
------------------------------- -------------------------------
Robert M. Adams Michael Iannaccone
Director of New Business Development Senior Vice President
STATEN ISLAND SAVINGS BANK
By: /s/ HARRY P. DOHERTY APRIL 17, 1997
------------------------------- -------------------------------
HARRY P. DOHERTY Date
Chairman
<PAGE> 7
Conversion Offering Enhancement Services- Continued
Prepare other marketing materials, including prospecting letters and brochures,
and media advertisements.
Arrange logistics of community information meeting(s) as required.
Prepare audio-visual presentation by senior management for community
information meeting(s).
Prepare management for question-and-answer period at community information
meeting(s).
Attend and address community information meeting(s) and be available to answer
questions.
Broker-Assisted Sales Services.
Arrange for broker information meeting(s) as required.
Prepare audio-visual presentation for broker information meeting(s).
Prepare script for presentation by senior management at broker information
meeting(s).
Prepare management for question-and-answer period at broker information
meeting(s).
Attend and address broker information meeting(s) and be available to answer
questions.
Produce confidential broker memorandum to assist participating brokers in
selling the Bank's common stock.
Aftermarket Support Services
Keefe, Bruyette & Woods will make a market and provide on-going research to the
Company. In addition, KBW will use its best efforts to secure another market
maker.
<PAGE> 8
EXHIBIT A
CONVERSION SERVICES PROPOSAL
TO STATEN ISLAND SAVINGS BANK
KBW provides thrift institutions converting from mutual to stock form of
ownership with a comprehensive program of conversion services designed to
promote an orderly, efficient, cost-effective and long-term stock distribution.
The following list is representative of the conversion services, if
appropriate, we propose to perform on behalf of the Bank.
General Services
Assist management and legal counsel with the design of the transaction
structure.
Analyze and make recommendations on bids from printing, transfer agent, and
appraisal firms.
Assist officers and directors in obtaining bank loans to purchase stock, if
requested.
Assist in drafting and distribution of press releases as required or
appropriate.
Conversion Offering Enhancement Services
Establish and manage Conversion Center at the Bank. Conversion Center personnel
will track prospective investors; record stock orders; mail order
confirmations; provide the Bank's senior management with daily reports; answer
customer inquiries; and handle special situations as they arise.
Assign KBW's personnel to be at the Bank through completion of the Subscription
and Community Offerings to manage the Conversion Center, meet with prospective
shareholders at individual and community information meetings, solicit local
investor interest through a tele-marketing campaign, answer inquiries, and
otherwise assist in the sale of stock in the Subscription and Community
Offerings. This effort will be lead by a Principal of KBW.
Create target investor list based upon review of the Bank's depositor base.
Provide intensive financial and marketing input for drafting of the prospectus.
<PAGE> 1
Exhibit 2.0
PLAN OF CONVERSION
OF
STATEN ISLAND SAVINGS BANK
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION
NUMBER PAGE
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<S> <C> <C>
1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. General Procedure for Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Total Number of Shares and Purchase Price of Conversion Stock . . . . . . . . . . . . . . . . . 7
5. Subscription Rights of Eligible Account Holders . . . . . . . . . . . . . . . . . . . . . . . . 8
6. Subscription Rights of Tax-Qualified Employee Stock Benefit Plans . . . . . . . . . . . . . . . 9
7. Subscription Rights of Supplemental Eligible Account Holders . . . . . . . . . . . . . . . . . 10
8. Subscription Rights of Other Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9. Subscription Rights of Directors, Officers and Employees . . . . . . . . . . . . . . . . . . . 11
10. Community Offering, Syndicated Community Offering, Public Offering
and Other Offerings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11. Limitations on Subscriptions and Purchases of Conversion Stock . . . . . . . . . . . . . . . . 13
12. Timing of Subscription Offering, Manner of Exercising Subscription
Rights and Order Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13. Payment for Conversion Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14. Account Holders in Nonqualified States or Foreign Countries . . . . . . . . . . . . . . . . . . 18
15. Voting Rights of Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
16. Liquidation Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
17. Transfer of Deposit Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
18. Requirements Following Conversion for Registration, Market Making
and Stock Exchange Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
19. Directors and Officers of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
20. Requirements for Stock Purchases by Directors and Officers Following
Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
21. Restrictions on Transfer of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
22. Restrictions on Acquisition of Stock of the Holding Company . . . . . . . . . . . . . . . . . . 22
23. Adoption of Federal Stock Charter and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . 23
24. Tax Rulings or Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
25. Stock Compensation Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
26. Dividend and Repurchase Restrictions on Stock . . . . . . . . . . . . . . . . . . . . . . . . . 24
27. Payment of Fees to Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
28. Establishment and Funding of Charitable Foundation . . . . . . . . . . . . . . . . . . . . . 24
29. Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
30. Amendment or Termination of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
31. Interpretation of the Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
<PAGE> 3
PLAN OF CONVERSION
OF
STATEN ISLAND SAVINGS BANK
1. INTRODUCTION.
The Board of Trustees of the Staten Island Savings Bank (the "Bank")
believes that a conversion of the Bank to stock form pursuant to this Plan of
Conversion is in the best interests of the Bank, as well as in the best
interests of the Bank's depositors, employees, customers and the communities
historically served by the Bank. The Conversion will result in the Bank being
wholly owned by a stock holding company. In addition, the Conversion will
result in the raising of additional capital which will provide the Bank,
through the holding company structure, greater organizational and operational
flexibility, including greater flexibility for effecting mergers and
acquisitions of financial institutions.
The Conversion is intended to provide a larger capital base to support
the Bank's lending and investment activities, possible diversification into
other related financial services activities and future growth through possible
acquisitions of other financial institutions. In addition, the Conversion is
intended to further enhance the Bank's capabilities to serve the borrowing and
other financial needs of the communities it currently serves. In furtherance
of the Bank's commitment to the communities which it serves, this Plan provides
for the establishment of a charitable foundation in connection with the
Conversion. The charitable foundation is intended to complement the Bank's
existing community reinvestment activities in a manner that will allow the
Bank's local community to share in the growth and profitability of the Holding
Company and the Bank. Consistent with the Bank's goal, the funding of the
charitable foundation will be accomplished by the Bank contributing funds
thereto prior to the Conversion or, immediately following the Conversion, the
Holding Company donating a number of shares of its authorized but unissued
Holding Company Common Stock not to exceed 8% of the number of shares of
Conversion Stock issued in the Conversion or a combination thereof. To
facilitate the Conversion, the Bank will first convert from a New York mutual
savings bank to a federal mutual savings bank and thereafter will form a
holding company.
2. DEFINITIONS.
As used in this Plan, the terms set forth below have the following
meaning:
2.1 Actual Purchase Price means the price per share at which the
Conversion Stock is ultimately sold by the Holding Company to Participants in
the Subscription Offering and Persons in the Community Offering and/or
Syndicated Community Offering in accordance with the terms hereof.
<PAGE> 4
2.2 Affiliate means a Person who, directly or indirectly, through one
or more intermediaries, controls or is controlled by or is under common control
with the Person specified.
2.3 Application for Conversion shall have the meaning set forth in
Section 3(a) hereof.
2.4 Associate when used to indicate a relationship with any Person,
means (i) a corporation or organization (other than the Bank, a majority-owned
subsidiary of the Bank or the Holding Company) of which such Person is a
director, officer or partner or is, directly or indirectly, the beneficial
owner of 10% or more of any class of equity securities, (ii) any trust or other
estate in which such Person has a substantial beneficial interest or as to
which such Person serves as trustee or in a similar fiduciary capacity,
provided, however, that such terms shall not include any Tax-Qualified Employee
Stock Benefit Plan or Non-Tax-Qualified Employee Stock Benefit Plan of the
Holding Company or the Bank in which such Person has a substantial beneficial
interest or serves as a trustee or in a similar fiduciary capacity, and (iii)
any relative or spouse of such Person, or any relative of such spouse of such
Person, who has the same home as such Person or who is a director or officer of
the Bank or the Holding Company or any of the subsidiaries of the foregoing.
2.5 Bank means Staten Island Savings Bank, in its mutual or stock
form, as the sense of the reference requires.
2.6 Bank Benefit Plans includes, but is not limited to, Tax-Qualified
Employee Stock Benefit Plans and Non-Tax-Qualified Employee Stock Benefit
Plans.
2.7 Code means the Internal Revenue Code of 1986, as amended.
2.8 Community Offering means the offering for sale by the Holding
Company of any shares of Conversion Stock not subscribed for in the
Subscription Offering to (i) natural persons residing in counties in New York
in which the Bank has a branch office, and (ii) such other Persons within or
without the State of New York as may be selected by the Holding Company and the
Bank within their sole discretion.
2.9 Control (including the terms "controlling," "controlled by," and
"under common control with") means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.
2.10 Conversion means (i) the adoption of a federal stock charter by
the Bank to authorize the issuance of shares of capital stock and otherwise to
conform to the requirements of a stock savings and loan association organized
under the laws of the United States (ii) the issuance of Conversion Stock by
the Holding Company as provided herein and
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<PAGE> 5
(iii) the purchase by the Holding Company of all of the capital stock of the
Bank to be issued by the Bank in connection with its conversion from mutual to
stock form.
2.11 Conversion Stock means the Holding Company Common Stock to be
issued and sold in the Offering pursuant to the Plan of Conversion, which stock
cannot and will not be insured by the FDIC, and which shall not include shares
issued to the charitable foundation pursuant to Section 28 hereof.
2.12 Deposit Account means withdrawable or repurchasable shares,
investment certificates or deposits or other savings accounts, including money
market deposit accounts and negotiable order of withdrawal accounts, held by an
account holder of the Bank.
2.13 Director, Trustee, Officer and Employee means the terms as
applied respectively to any person who is a director, trustee, officer or
employee of the Bank or any subsidiary thereof.
2.14 ESOP means a Tax-Qualified Employee Stock Benefit Plan adopted by
the Company and the Bank in connection with the Conversion, the purpose of
which shall be to acquire capital stock of the Company, including Conversion
Stock.
2.15 Eligible Account Holder means any Person holding a Qualifying
Deposit on the Eligibility Record Date for purposes of determining Subscription
Rights and establishing subaccount balances in the liquidation account to be
established pursuant to Section 16 hereof.
2.16 Eligibility Record Date means the date for determining Qualifying
Deposits of Eligible Account Holders and is the close of business on March 31,
1996.
2.17 Estimated Price Range means the range of the estimated aggregate
pro forma market value of the total number of shares of Conversion Stock to be
issued in the Conversion, as determined by the Independent Appraiser in
accordance with Section 4 hereof.
2.18 FDIC means the Federal Deposit Insurance Corporation or any
successor thereto.
2.19 Holding Company means the corporation organized at the direction
of the Board of Trustees of the Bank to hold all of the capital stock of the
Bank, which shall be incorporated under the laws of such state as so determined
by the Bank's Board of Trustees.
2.20 Holding Company Common Stock means the common stock of the
Holding Company.
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<PAGE> 6
2.21 Independent Appraiser means the independent investment banking or
financial consulting firm retained by the Bank to prepare an appraisal of the
estimated pro forma market value of the Conversion Stock.
2.22 Initial Purchase Price means the price per share to be paid
initially by Participants for shares of Conversion Stock subscribed for in the
Subscription Offering and by Persons for shares of Conversion Stock ordered in
the Community Offering and/or Syndicated Community Offering.
2.23 Member means any Person qualifying as a member of the Bank upon
its charter conversion to a federal mutual charter in accordance with its
mutual charter and bylaws and the laws of the United States.
2.24 Offerings means the Subscription Offering, the Community Offering
and the Syndicated Community Offering or Public Offering.
2.25 Officer means the president, executive vice president, senior
vice president, vice president, secretary, treasurer or principal financial
officer, comptroller or principal accounting officer and any other person
performing similar functions with respect to any organization whether
incorporated or unincorporated.
2.26 Order Form means the form or forms provided by the Bank,
containing all such terms and provisions as set forth in Section 12 hereof, to
a Participant or other Person by which Conversion Stock may be ordered in the
Subscription Offering, the Community Offering and/or the Syndicated Community
Offering.
2.27 Other Member means a Voting Member who is not an Eligible Account
Holder or Supplemental Eligible Account Holder.
2.28 OTS means the Office of Thrift Supervision or any successor
thereto.
2.29 Participant means any Eligible Account Holder, Tax-Qualified
Employee Stock Benefit Plan, Supplemental Eligible Account Holder, Other Member
and Director, Officer and Employee.
2.30 Person means an individual, a corporation, a partnership, an
association, a joint stock company, a trust, an unincorporated organization or
a government or any political subdivision thereof.
2.31 Plan and Plan of Conversion mean this Plan of Conversion as
adopted by the Board of Trustees of the Bank and any amendment hereto approved
as provided herein.
2.32 Prospectus means the one or more documents to be used in offering
the Conversion Stock in the Subscription Offering and, to the extent
applicable, Community
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<PAGE> 7
Offering and Syndicated Community Offering and for providing information to
Participants and other Persons in connection with such offerings.
2.33 Public Offering means an underwritten firm commitment
offering to the public through one or more underwriters.
2.34 Qualifying Deposit means the aggregate balance of all Deposit
Accounts in the Bank of (i) an Eligible Account Holder at the close of business
on the Eligibility Record Date, provided such aggregate balance is not less
than $50 and (ii) a Supplemental Eligible Account Holder at the close of
business on the Supplemental Eligibility Record Date, provided such aggregate
balance is not less than $50.
2.35 SEC means the Securities and Exchange Commission.
2.36 Special Meeting means the special meeting of Members of the Bank
called for the purpose of submitting this Plan to the Members for their
approval, including adoption of a federal stock charter and new bylaws to
authorize the issuance of capital stock and otherwise to read in a form
consistent with a federally chartered stock form savings and loan association,
and any adjournments of such meeting.
2.37 Subscription Offering means the offering of the Conversion Stock
to Participants.
2.38 Subscription Rights means non-transferable rights to subscribe
for Conversion Stock granted to Participants pursuant to the terms of this
Plan.
2.39 Supplemental Eligible Account Holder if applicable, means any
Person, except Directors and Officers of the Bank and their Associates, holding
a Qualifying Deposit at the close of business on the Supplemental Eligibility
Record Date.
2.40 Supplemental Eligibility Record Date if applicable, means the
date for determining Qualifying Deposits of Supplemental Eligible Account
Holders and shall be required if the Eligibility Record Date is more than 15
months prior to the date of the latest amendment to the application for
Conversion filed prior to approval of such application by the OTS. If
applicable, the Supplemental Eligibility Record Date shall be the last day of
the calendar quarter preceding OTS approval of the application for Conversion
submitted by the Bank pursuant to this Plan of Conversion.
2.41 Syndicated Community Offering means the offering for sale by a
syndicate of broker-dealers to the general public of shares of Conversion Stock
not purchased in the Subscription Offering and the Community Offering.
2.42 Tax-Qualified Employee Stock Benefit Plan means any defined
benefit plan or defined contribution plan, including the Employee Stock
Ownership Plan established by the Company and the Bank in connection with the
Conversion, a stock bonus plan,
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<PAGE> 8
profit-sharing plan or other plan, which is established for the benefit of the
employees of the Holding Company and the Bank and which, with its related
trust, meets the requirements to be "qualified" under Section 401 of the Code
as from time to time in effect. A "Non-Tax-Qualified Employee Stock Benefit
Plan" is any defined benefit plan or defined contribution stock benefit plan
which is not so qualified.
2.43 Voting Member means a Person who at the close of business on the
Voting Record Date is entitled to vote as a member of the Bank in accordance
with its federal mutual charter and bylaws.
2.44 Voting Record Date means the date for determining the eligibility
of Members to vote at the Special Meeting.
3. GENERAL PROCEDURE FOR CONVERSION.
(a) The Bank will take the necessary steps to convert from a New York
mutual savings bank organization certificate to a federal mutual savings bank
charter promptly after approval of this Plan by the Board of Trustees of the
Bank. Subsequent to the completion of the charter conversion, an Application
for Conversion, including the Plan, will be submitted, together with all
requisite material, to the OTS for approval. The Bank also will cause notice
of the adoption of the Plan by the Board of Trustees of the Bank to be given by
publication in a newspaper having general circulation in each community in
which an office of the Bank is located, and will cause copies of the Plan to be
made available at each office of the Bank for inspection by account holders.
The Bank will post the notice of the filing of its Application for Conversion
in each of its offices and will again cause to be published, in accordance with
the requirements of applicable regulations of the OTS, a notice of the filing
with the OTS of an application to convert from mutual to stock form.
(b) Promptly following approval of the Bank's Application for
Conversion by the OTS, this Plan will be submitted to the Members for their
consideration and approval at the Special Meeting. The Bank may, at its
option, mail to all Members as of the Voting Record Date, at their last known
address appearing on the records of the Bank, a proxy statement in either long
or summary form describing the Plan which will be submitted to a vote of the
Members at the Special Meeting. If the Bank provides a summary form proxy
statement, the Bank shall also mail to all Eligible Account Holders and
Supplemental Eligible Account Holders who are not Members of the Bank as of the
Voting Record Date a letter informing them of their right to receive a
Prospectus and Order Form for the purchase of Conversion Stock. Under such
circumstances, Participants will be given the opportunity to request a
Prospectus and Order Form and other materials relating to the Conversion by
returning a postage prepaid card which will be distributed with the proxy
statement or letter. If the Plan is approved by the affirmative vote of a
majority of the total number of votes eligible to be cast by Voting Members at
the Special Meeting, the Bank shall take all other necessary organizational
steps pursuant to applicable laws and regulations to amend its
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<PAGE> 9
charter and bylaws to authorize the issuance of its capital stock to the
Holding Company at the time the Conversion of the Bank to stock form is
consummated.
(c) As soon as practicable after the adoption of the Plan by the
Board of Trustees of the Bank, the Bank shall cause the Holding Company to be
incorporated and the Board of Directors of the Holding Company shall adopt the
Plan by at least a two-thirds vote. The Holding Company shall submit or cause
to be submitted to the OTS such applications as may be required for approval of
the Holding Company's acquisition of the Bank and a Registration Statement to
the SEC to register the Conversion Stock under the Securities Act of 1933, as
amended. The Holding Company shall also register the Conversion Stock under
any applicable state securities laws, subject to Section 14 hereof. Upon
registration and after the receipt of all required regulatory approvals, the
Conversion Stock shall be first offered for sale in a Subscription Offering to
Eligible Account Holders, Tax-Qualified Employee Stock Benefit Plans,
Supplemental Eligible Account Holders, if applicable, Other Members and
Directors, Officers and Employees. It is anticipated that any shares of
Conversion Stock remaining unsold after the Subscription Offering will be sold
through a Community Offering and/or a Syndicated Community Offering. The
purchase price per share for the Conversion Stock shall be a uniform price
determined in accordance with Section 4 hereof. The Holding Company shall
purchase all of the capital stock of the Bank with an amount of the net
proceeds received by the Holding Company from the sale of Conversion Stock as
shall be determined by the Boards of Directors of the Holding Company and the
Bank and as shall be approved by the OTS.
(d) The Holding Company and the Bank may retain and pay for the
services of financial and other advisors and investment bankers to assist in
connection with any or all aspects of the Conversion, including in connection
with the Subscription Offering, Community Offering and/or any Syndicated
Community Offering, the payment of fees to brokers and investment bankers for
assisting Persons in completing and/or submitting Order Forms. All fees,
expenses, retainers and similar items shall be reasonable.
4. TOTAL NUMBER OF SHARES AND PURCHASE PRICE OF CONVERSION
STOCK.
(a) The aggregate price at which all shares of Conversion Stock shall
be sold shall be based on a pro forma valuation of the aggregate market value
of the Conversion Stock prepared by the Independent Appraiser. The valuation
shall be based on financial information relating to the Holding Company and the
Bank, economic and financial conditions, a comparison of the Holding Company
and the Bank with selected publicly-held financial institutions and holding
companies and with comparable financial institutions and holding companies and
such other factors as the Independent Appraiser may deem to be important,
including, but not limited to, the projected operating results and financial
condition of the Holding Company and the Bank. The valuation shall be stated
in terms of an Estimated Price Range, the maximum of which shall generally be
no more than 15% above the average of the minimum and maximum of such price
range and the minimum of
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<PAGE> 10
which shall generally be no more than 15% below such average. The valuation
shall be updated during the Conversion as market and financial conditions
warrant and as may be required by the OTS.
(b) Based upon the independent valuation, the Boards of Directors of
the Holding Company and the Bank shall fix the Initial Purchase Price and the
number of shares of Conversion Stock to be offered in the Subscription
Offering, Community Offering and/or Syndicated Community Offering. The Actual
Purchase Price and the total number of shares of Conversion Stock to be issued
in the Offerings shall be determined by the Boards of Directors of the Holding
Company and the Bank upon conclusion of such offerings in consultation with the
Independent Appraiser and any financial advisor or investment banker retained
by the Bank in connection with such offerings.
(c) Subject to the approval of the OTS, the Estimated Price Range may
be increased or decreased to reflect market and economic conditions prior to
completion of the Conversion or to fill the order of the Tax-Qualified Employee
Stock Benefit Plans, and under such circumstances the Holding Company may
increase or decrease the total number of shares of Conversion Stock to be
issued in the Conversion to reflect any such change. Notwithstanding anything
to the contrary contained in this Plan, no resolicitation of subscribers shall
be required and subscribers shall not be permitted to modify or cancel their
subscriptions unless the gross proceeds from the sale of the Conversion Stock
issued in the Conversion are less than the minimum or more than 15% above the
maximum of the Estimated Price Range set forth in the Prospectus. In the event
of an increase in the total number of shares offered in the Conversion due to
an increase in the Estimated Price Range, the priority of share allocation
shall be as set forth in this Plan.
5. SUBSCRIPTION RIGHTS OF ELIGIBLE ACCOUNT HOLDERS.
(a) Each Eligible Account Holder shall receive, without payment,
non-transferable Subscription Rights to purchase up to the greater of (i)
$300,000 of Conversion Stock (or such maximum purchase limitation as may be
established for the Community Offering and/or Syndicated Community Offering or
Public Offering), (ii) one-tenth of 1% of the total offering of shares in the
Subscription Offering and (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of Conversion
Stock offered in the Subscription Offering by a fraction, of which the
numerator is the amount of the Qualifying Deposits of the Eligible Account
Holder and the denominator is the total amount of all Qualifying Deposits of
all Eligible Account Holders.
(b) In the event of an oversubscription for shares of Conversion
Stock pursuant to Section 5(a), available shares shall be allocated among
subscribing Eligible Account Holders so as to permit each such Eligible Account
Holder, to the extent possible, to purchase a number of shares which will make
his or her total allocation equal to the lesser of the number of shares
subscribed for or 100 shares. Any available shares remaining after each
subscribing Eligible Account Holder has been allocated the lesser of the number
of shares
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<PAGE> 11
subscribed for or 100 shares shall be allocated among the subscribing Eligible
Account Holders in the proportion which the Qualifying Deposit of each such
subscribing Eligible Account Holder bears to the total Qualifying Deposits of
all such subscribing Eligible Account Holders, provided that no fractional
shares shall be issued. Subscription Rights of Eligible Account Holders shall
be subordinated to the priority rights of the ESOP to purchase shares in excess
of the Maximum Shares, as defined in Section 6 below. Subscription Rights of
Eligible Account Holders who are also Directors, Trustees or Officers of the
Bank and their Associates shall be subordinated to those of other Eligible
Account Holders to the extent that they are attributable to increased deposits
during the one year period preceding the Eligibility Record Date.
6. SUBSCRIPTION RIGHTS OF TAX-QUALIFIED EMPLOYEE STOCK BENEFIT
PLANS
Tax-Qualified Employee Stock Benefit Plans, including the ESOP, shall
receive, without payment, non-transferable Subscription Rights to purchase in
the aggregate up to 10% of the Conversion Stock, including shares of Conversion
Stock to be issued in the Conversion as a result of an increase in the
Estimated Price Range after commencement of the Subscription Offering and prior
to completion of the Conversion. The subscription rights granted to
Tax-Qualified Employee Stock Benefit Plans shall be subject to the availability
of shares of Conversion Stock after taking into account the shares of
Conversion Stock purchased by Eligible Account Holders, provided, however, that
in the event that the total number of shares offered in the Conversion is
increased to an amount greater than the number of shares representing the
maximum of the Estimated Price Range as set forth in the Prospectus ("Maximum
Shares"), the ESOP shall have a priority right to purchase any such shares
exceeding the Maximum Shares up to an aggregate of 8% of Conversion Stock.
Shares of Conversion Stock purchased by any individual participant ("Plan
Participant") in a Tax-Qualified Employee Stock Benefit Plan using funds
therein pursuant to the exercise of subscription rights granted to such
Participant in his individual capacity as an Eligible Account Holder and/or
Supplemental Eligible Account Holder and/or purchases by such Plan Participant
in the Community Offering shall not be deemed to be purchases by a
Tax-Qualified Employee Stock Benefit Plan for purposes of calculating the
maximum amount of Conversion Stock that Tax-Qualified Employee Stock Benefit
Plans may purchase pursuant to the first sentence of this Section 6 if the
individual Plan Participant controls or directs the investment authority with
respect to such account or subaccount. Consistent with applicable laws and
regulations and policies and practices of the OTS, the ESOP may use funds
contributed by the Holding Company or the Bank and/or borrowed from an
independent financial institution to exercise such Subscription Rights, and the
Holding Company and the Bank may make scheduled discretionary contributions
thereto, provided that such contributions do not cause the Holding Company or
the Bank to fail to meet any applicable capital maintenance requirements.
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<PAGE> 12
7. SUBSCRIPTION RIGHTS OF SUPPLEMENTAL ELIGIBLE ACCOUNT
HOLDERS.
(a) In the event that the Eligibility Record Date is more than 15
months prior to the date of the latest amendment to the Application for
Conversion filed prior to OTS approval, then, and only in that event, each
Supplemental Eligible Account Holder shall receive, without payment,
non-transferable Subscription Rights to purchase up to the greater of (i)
$300,000 of Conversion Stock (or such maximum purchase limitation as may be
established for the Community Offering and/or Syndicated Community Offering or
Public Offering), (ii) one-tenth of 1% of the total offering of shares in the
Subscription Offering and (iii) 15 times the product (rounded down to the next
whole number) obtained by multiplying the total number of shares of Conversion
Stock offered in the Subscription Offering by a fraction, of which the
numerator is the amount of the Qualifying Deposits of the Supplemental Eligible
Account Holder and the denominator is the total amount of all Qualifying
Deposits of all Supplemental Eligible Account Holders, subject to the
availability of shares of Common Stock for purchase after taking into account
the shares of Conversion Stock purchased by Eligible Account Holders and the
ESOP through the exercise of Subscription Rights under Sections 5 and 6 hereof.
(b) In the event of an oversubscription for shares of Conversion
Stock pursuant to Section 7(a), available shares shall be allocated among
subscribing Supplemental Eligible Account Holders so as to permit each such
Supplemental Eligible Account Holder, to the extent possible, to purchase a
number of shares sufficient to make his or her total allocation (including the
number of shares, if any, allocated in accordance with Section 5(a)) equal to
the lesser of the number of shares subscribed for or 100 shares. Any remaining
available shares shall be allocated among subscribing Supplemental Eligible
Account Holders in the proportion that the amount of their respective
Qualifying Deposits bears to the total amount of the Qualifying Deposits of all
subscribing Supplemental Eligible Account Holders, provided that no fractional
shares shall be issued.
8. SUBSCRIPTION RIGHTS OF OTHER MEMBERS.
(a) Each Other Member shall receive, without payment,
non-transferable Subscription Rights to purchase up to the greater of (i)
$300,000 of Conversion Stock (or such maximum purchase limitation as may be
established for the Community Offering and/or Syndicated Community Offering or
Public Offering) and (ii) one-tenth of 1% of the total offering of shares in
the Subscription Offering, in each case if and only to the extent that shares
of Conversion Stock are available for purchase after taking into account the
shares of Conversion Stock purchased by Eligible Account Holders, Tax-Qualified
Employee Stock Benefit Plans and Supplemental Eligible Account Holders through
the exercise of Subscription Rights under Sections 5, 6 and 7 hereof.
(b) If, pursuant to this Section 8, Other Members subscribe for a
number of shares of Conversion Stock in excess of the total number of shares of
Conversion Stock remaining,
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<PAGE> 13
shares shall be allocated so as to permit each such Other Member, to the extent
possible, to purchase a number of shares which will make his or her total
allocation equal to the lesser of the number of shares subscribed for or 100
shares. Any shares remaining will be allocated among the subscribing Other
Members whose subscriptions remain unsatisfied on an equal number of shares
basis per order until all orders have been filled or the remaining shares have
been allocated, provided no fractional shares shall be issued.
9. SUBSCRIPTION RIGHTS OF DIRECTORS, OFFICERS AND EMPLOYEES.
(a) To the extent that there are sufficient shares remaining after
satisfaction of all subscriptions under the above categories, Directors,
Officers and Employees of the Bank shall receive, without payment,
non-transferable subscription rights to purchase in this category, in the
aggregate, up to 15% of the shares of Conversion Stock offered in the
Subscription Offering.
(b) In the event of oversubscription pursuant to Section 9(a),
Subscription Rights for the purchase of such shares shall be allocated among
the individual Directors, Officers and Employees of the Bank on a point system
basis, whereby a point will be assigned for each year of employment and for
each salary increment of $5,000 per annum and five points for each office held
in the Bank, including a directorship. If any such Director, Officer or
Employee does not subscribe for his or her full allocation of shares, any
shares not subscribed for may be purchased by other Directors, Officers and
Employees in proportion to their respective subscriptions, provided that no
fractional shares shall be issued.
10. COMMUNITY OFFERING, SYNDICATED COMMUNITY OFFERING, PUBLIC
OFFERING AND OTHER OFFERINGS.
(a) If less than the total number of shares of the Conversion Stock
are sold in the Subscription Offering, it is anticipated that all remaining
shares of Conversion Stock shall, if practicable, be sold directly by the
Holding Company and the Bank in a Community Offering and/or a Syndicated
Community Offering. Subject to the requirements set forth herein, Conversion
Stock sold in the Community Offering and/or the Syndicated Community Offering
shall achieve the widest possible distribution of such stock.
(b) In the event of a Community Offering, all shares of Conversion
Stock which are not subscribed for in the Subscription Offering shall be
offered for sale by means of a direct community marketing program, which may
provide for the use of brokers, dealers or investment banking firms experienced
in the sale of financial institution securities. Any available shares in
excess of those not subscribed for in the Subscription Offering will be
available for purchase by members of the general public to whom a Prospectus is
delivered by the Holding Company or on its behalf, with preference given to
natural persons residing in counties in New York in which the Bank has a branch
office ("Preferred Subscribers").
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<PAGE> 14
(c) A Prospectus and Order Form shall be furnished to such Persons as
the Holding Company and the Bank may select in connection with the Community
Offering and each order for Conversion Stock in the Community Offering shall be
subject to the absolute right of the Holding Company and the Bank to accept or
reject any such order in whole or in part either at the time of receipt of an
order or as soon as practicable following completion of the Community Offering.
Available shares will be allocated first to each Preferred Subscriber whose
order is accepted by the Holding Company, in an amount equal to the lesser of
100 shares or the number of shares subscribed for by each such Preferred
Subscriber, if possible. Thereafter, any shares remaining will be allocated
among the Preferred Subscribers whose subscriptions remain unsatisfied on an
equal number of shares basis per order until all orders have been filled or the
remaining shares have been allocated, provided no fractional shares shall be
issued. If there are any shares remaining after all subscriptions by Preferred
Subscribers have been satisfied, such remaining shares shall be allocated to
other members of the general public who purchase in the Community Offering
applying the same allocation described above for Preferred Subscribers.
(d) The amount of Conversion Stock that any Person together with any
Associate thereof or group of Persons acting in concert may purchase in the
Community Offering shall not exceed the greater of (i) $300,000 or (ii)
one-tenth of 1% of the total offering of shares in the Subscription Offering,
provided, however, that this amount may be increased to 5% of the total
offering of shares in the Subscription Offering, subject to any required
regulatory approval but without the further approval of Members; provided,
further, that orders for Conversion Stock in the Community Offering shall first
be filled to a maximum of 2% of the total number of shares of Conversion Stock
sold in the Conversion and thereafter any remaining shares shall be allocated
on an equal number of shares basis per order until all orders have been filled,
provided no fractional shares shall be issued. The Holding Company and the
Bank may commence the Community Offering concurrently with, at any time during,
or as soon as practicable after the end of, the Subscription Offering, and the
Community Offering must be completed within 45 days after the completion of the
Subscription Offering, unless extended by the Holding Company and the Bank with
any required regulatory approval.
(e) Subject to such terms, conditions and procedures as may be
determined by the Holding Company and the Bank, all shares of Conversion Stock
not subscribed for in the Subscription Offering or ordered in the Community
Offering may be sold by a syndicate of broker-dealers to the general public in
a Syndicated Community Offering. Each order for Conversion Stock in the
Syndicated Community Offering shall be subject to the absolute right of the
Holding Company and the Bank to accept or reject any such order in whole or in
part either at the time of receipt of an order or as soon as practicable after
completion of the Syndicated Community Offering. The amount of Conversion
Stock that any Person together with any Associate thereof or group of Persons
acting in concert may purchase in the Syndicated Community Offering shall not
exceed $300,000 provided, however, that this amount may be increased to 5% of
the total offering of shares in the Subscription Offering, subject to any
required regulatory approval but without the further approval of Members;
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<PAGE> 15
provided further that orders for Conversion Stock in the Syndicated Community
Offering shall first be filled to a maximum of 2% of the total number of shares
of Conversion Stock sold in the Conversion and thereafter any remaining shares
shall be allocated on an equal number of shares basis per order until all
orders have been filled, provided no fractional shares shall be issued. The
Holding Company and the Bank may commence the Syndicated Community Offering
concurrently with, at any time during, or as soon as practicable after the end
of the Subscription Offering and/or Community Offering, and the Syndicated
Community Offering must be completed within 45 days after the completion of the
Subscription Offering, unless extended by the Holding Company and the Bank with
any required regulatory approval.
(f) The Holding Company and the Bank may sell any shares of
Conversion Stock remaining following the Subscription Offering, Community
Offering and/or the Syndicated Community Offering in a Public Offering. The
provisions of Section 11 hereof shall not be applicable to the sales to
underwriters for purposes of the Public Offering but shall be applicable to
sales by the underwriters to the public. The price to be paid by the
underwriters in such an offering shall be equal to the Actual Purchase Price
less an underwriting discount to be negotiated among such underwriters and the
Bank and the Holding Company, subject to any required regulatory approval or
consent.
(g) If for any reason a Syndicated Community Offering or Public
Offering of shares of Conversion Stock not sold in the Subscription Offering
and the Community Offering cannot be effected, or in the event that any
insignificant residue of shares of Conversion Stock is not sold in the
Subscription Offering, Community Offering or Syndicated Community Offering, the
Holding Company and the Bank shall use their best efforts to obtain other
purchasers for such shares in such manner and upon such conditions as may be
satisfactory to the OTS.
11. LIMITATIONS ON SUBSCRIPTIONS AND PURCHASES OF CONVERSION STOCK.
(a) The maximum number of shares of Conversion Stock which may be
purchased in the Conversion by the ESOP shall not exceed 8% and all
Tax-Qualified Employee Stock Benefit Plans shall not exceed 10% of the total
number of shares of Conversion Stock sold in the Conversion, in each instance,
including any shares which may be issued in the event of an increase in the
maximum of the Estimated Price Range to reflect changes in market and economic
conditions after commencement of the Subscription Offering and prior to the
completion of the Conversion; provided; however, that purchases of Conversion
Stock which are made by Plan Participants pursuant to the exercise of
subscription rights granted to such Plan Participant in his individual capacity
as an Eligible Account Holder or Supplemental Eligible Account Holder or
purchases by a Plan Participant in the Community Offering using the funds
thereof held in Tax-Qualified Employee Stock Benefit Plans shall not be deemed
to be purchases by a Tax-Qualified Employee Stock Benefit Plan for purposes of
this Section 11(a).
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<PAGE> 16
(b) Except in the case of Tax-Qualified Employee Stock Benefit Plans
in the aggregate, as set forth in Section 11(a) hereof, and certain Eligible
Account Holders and Supplemental Eligible Account Holders, and in addition to
the other restrictions and limitations set forth herein, the maximum amount of
Conversion Stock which any Person together with any Associate or group of
Persons acting in concert may, directly or indirectly, subscribe for or
purchase in the Conversion (including without limitation the Subscription
Offering, Community Offering and/or Syndicated Community Offering) shall not
exceed 1% of the total number of shares of Conversion Stock. The purchase
limitation set forth herein shall not apply to the Holding Company Common Stock
contributed to the charitable foundation in accordance with the provisions of
Section 28 hereof nor shall such shares be deemed Conversion Stock.
(c) The number of shares of Conversion Stock which Directors,
Trustees and Officers and their Associates may purchase in the aggregate in the
Conversion shall not exceed 25% of the total number of shares of Conversion
Stock offered in the Conversion, including any shares which may be issued in
the event of an increase in the maximum of the Estimated Price Range to reflect
changes in market and economic conditions after commencement of the
Subscription Offering and prior to completion of the Conversion.
(d) No Person may purchase fewer than 25 shares of Conversion Stock
in the Conversion, to the extent such shares are available; provided, however,
that if the Actual Purchase Price is greater than $20.00 per share, such
minimum number of shares shall be adjusted so that the aggregate Actual
Purchase Price for such minimum shares will not exceed $500.00.
(e) For purposes of the foregoing limitations and the determination
of Subscription Rights, (i) Directors and Officers shall not be deemed to be
Associates or a group acting in concert solely as a result of their capacities
as such, (ii) shares purchased by Tax-Qualified Employee Stock Benefit Plans
shall not be attributable to the individual trustees or beneficiaries of any
such plan for purposes of determining compliance with the limitations set forth
in Section 11(b) hereof, and (iii) shares purchased by Tax-Qualified Employee
Stock Benefit Plans shall not be attributable to the individual trustees or
beneficiaries of any such plan for purposes of determining compliance with the
limitation set forth in Section 11(c) hereof.
(f) Subject to any required regulatory approval and the requirements
of applicable laws and regulations, but without further approval of the Members
of the Bank or resolicitation of subscribers, the Holding Company and the Bank
may increase or decrease any of the individual or aggregate purchase
limitations set forth herein to a percentage which does not exceed 5% or fall
below .10% of the total offering of shares in the Subscription Offering whether
prior to, during or after the Subscription Offering, Community Offering,
Syndicated Community Offering and/or Public Offering. In the event that an
individual purchase limitation is increased after commencement of the
Subscription Offering or any other offering, the Holding Company and the Bank
shall permit any Person
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<PAGE> 17
who subscribed for the maximum number of shares of Conversion Stock to purchase
an additional number of shares such that such Person shall be permitted to
subscribe for the then maximum number of shares permitted to be subscribed for
by such Person, subject to the rights and preferences of any Person who has
priority Subscription Rights. In the event that an individual purchase
limitation is decreased after commencement of the Subscription Offering or any
other offering, the orders of any Person who subscribed for the maximum number
of shares of Conversion Stock shall be decreased by the minimum amount
necessary so that such Person shall be in compliance with the then maximum
number of shares permitted to be subscribed for by such Person.
(g) The Holding Company and the Bank shall have the right to take all
such action as they may, in their sole discretion, deem necessary, appropriate
or advisable in order to monitor and enforce the terms, conditions, limitations
and restrictions contained in this Section 11 and elsewhere in this Plan and
the terms, conditions and representations contained in the Order Form,
including, but not limited to, the absolute right (subject only to any
necessary regulatory approvals or concurrence) to reject, limit or revoke
acceptance of any subscription or order and to delay, terminate or refuse to
consummate any sale of Conversion Stock which they believe might violate, or is
designed to, or is any part of a plan to, evade or circumvent such terms,
conditions, limitations, restrictions and representations. Any such action
shall be final, conclusive and binding on all persons and the Holding Company
and the Bank and their respective Boards shall be free from any liability to
any Person on account of any such action.
12. TIMING OF SUBSCRIPTION OFFERING, MANNER OF EXERCISING
SUBSCRIPTION RIGHTS AND ORDER FORMS.
(a) The Subscription Offering may be commenced concurrently with or
at any time after the mailing to Voting Members of the proxy statement to be
used in connection with the Special Meeting. The Subscription Offering may be
closed before the Special Meeting, provided that the offer and sale of the
Conversion Stock shall be conditioned upon the approval of the Plan by Voting
Members at the Special Meeting.
(b) The exact timing of the commencement of the Subscription Offering
shall be determined by the Holding Company and the Bank in consultation with
the Independent Appraiser and any financial or advisory or investment banking
firm retained by them in connection with the Conversion. The Holding Company
and the Bank may consider a number of factors, including, but not limited to,
their current and projected future earnings, local and national economic
conditions and the prevailing market for stocks in general and stocks of
financial institutions in particular. The Holding Company and the Bank shall
have the right to withdraw, terminate, suspend, delay, revoke or modify any
such Subscription Offering, at any time and from time to time, as it in its
sole discretion may determine, without liability to any Person, subject to
compliance with applicable securities laws and any necessary regulatory
approval or concurrence.
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<PAGE> 18
(c) The Holding Company and the Bank shall, promptly after the SEC
has declared the Prospectus effective and all required regulatory approvals
have been obtained, distribute or make available the Prospectus, together with
Order Forms for the purchase of Conversion Stock, to all Participants for the
purpose of enabling them to exercise their respective Subscription Rights,
subject to Section 14 hereof. The Holding Company and the Bank may elect to
mail a Prospectus and Order Form only to those Participants who request such
materials by returning a postage-paid card to the Holding Company and the Bank
by a date specified in the letter informing them of their Subscription Rights.
Under such circumstances, the Subscription Offering shall not be closed until
the expiration of 30 days after the mailing by the Holding Company and the Bank
of the postage-paid card to Participants.
(d) A single Order Form for all Deposit Accounts maintained with the
Bank by an Eligible Account Holder and a Supplemental Eligible Account Holder
may be furnished irrespective of the number of Deposit Accounts maintained with
the Bank on the Eligibility Record Date and Supplemental Eligibility Record
Date, respectively. No person holding a subscription right may exceed any
otherwise applicable purchase limitation by submitting multiple orders for
Conversion Stock. Multiple orders are subject to adjustment, as appropriate,
on a pro rata basis and deposit balances will be divided equally among such
orders in allocating shares in the event of an oversubscription.
(e) The recipient of an Order Form shall have no less than 20 days
and no more than 45 days from the date of mailing of the Order Form (with the
exact termination date to be set forth on the Order Form) to properly complete
and execute the Order Form and deliver it to the Bank. The Holding Company and
the Bank may extend such period by such amount of time as they determine is
appropriate. Failure of any Participant to deliver a properly executed Order
Form to the Bank, along with payment (or authorization for payment by
withdrawal) for the shares of Conversion Stock subscribed for, within the time
limits prescribed, shall be deemed a waiver and release by such person of any
rights to subscribe for shares of Conversion Stock. Each Participant shall be
required to confirm to the Holding Company and the Bank by executing an Order
Form that such Person has fully complied with all of the terms, conditions,
limitations and restrictions in the Plan.
(f) The Holding Company and the Bank shall have the absolute right,
in their sole discretion and without liability to any Participant or other
Person, to reject any Order Form, including, but not limited to, any Order Form
(i) that is improperly completed or executed; (ii) that is not timely received;
(iii) that is submitted by facsimile or is photocopied; (iv) that is not
accompanied by the proper payment (or authorization of withdrawal for payment)
or, in the case of institutional investors in the Community Offering, not
accompanied by an irrevocable order together with a legally binding commitment
to pay the full amount of the purchase price prior to 48 hours before the
completion of the Offerings; (v) submitted by a Person whose representations
the Holding Company and the Bank believe to be false or who they otherwise
believe, either alone, or acting in concert with others, is violating, evading
or circumventing, or intends to violate, evade or circumvent, the terms and
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<PAGE> 19
conditions of the Plan. Furthermore, in the event Order Forms (i) are not
delivered and are returned to the Bank by the United States Postal Service or
the Bank is unable to locate the addressee, or (ii) are not mailed pursuant to
a "no mail" order placed in effect by the account holder, the subscription
rights of the person to which such rights have been granted will lapse as
though such person failed to return the contemplated Order Form within the time
period specified thereon. The Holding Company and the Bank may, but will not be
required to, waive any irregularity on any Order Form or may require the
submission of corrected Order Forms or the remittance of full payment for
shares of Conversion Stock by such date as they may specify. The
interpretation of the Holding Company and the Bank of the terms and conditions
of the Order Forms shall be final and conclusive.
13. PAYMENT FOR CONVERSION STOCK.
(a) Payment for shares of Conversion Stock subscribed for by
Participants in the Subscription Offering and payment for shares of Conversion
Stock ordered by Persons in the Community Offering shall be equal to the
Initial Purchase Price per share multiplied by the number of shares which are
being subscribed for or ordered, respectively. Such payment may be made in
cash, if delivered in person, or by check or money order at the time the Order
Form is delivered to the Bank. The Bank, in its sole and absolute discretion,
may also elect to receive payment for shares of Conversion Stock by wire
transfer. In addition, the Holding Company and the Bank may elect to provide
Participants and/or other Persons who have a Deposit Account with the Bank the
opportunity to pay for shares of Conversion Stock by authorizing the Bank to
withdraw from such Deposit Account an amount equal to the aggregate Initial
Purchase Price of such shares. Payment may also be made by a Participant using
funds held for such Participant's benefit by a Bank Benefit Plan to the extent
that such plan allows participants or any related trust established for the
benefit of such participants to direct that some or all of their individual
accounts or sub-accounts be invested in Conversion Stock. If the Actual
Purchase Price is less than the Initial Purchase Price, the Bank shall refund
the difference to all Participants and other Persons, unless the Holding
Company and the Bank choose to provide Participants and other Persons the
opportunity on the Order Form to elect to have such difference applied to the
purchase of additional whole shares of Conversion Stock. If the Actual
Purchase Price is more than the Initial Purchase Price, the Bank shall reduce
the number of shares of Conversion Stock ordered by Participants and other
Persons and refund any remaining amount which is attributable to a fractional
share interest, unless the Bank chooses to provide Participants and other
Persons the opportunity to increase the Actual Purchase Price submitted to it.
(b) Consistent with applicable laws and regulations and policies and
practices of the OTS, payment for shares of Conversion Stock subscribed for by
the ESOP may be made with funds contributed by the Holding Company or the Bank
and/or funds obtained pursuant to a loan from an unrelated financial
institution pursuant to a loan commitment which is in force from the time that
any such plan submits an Order Form until the closing of the transactions
contemplated hereby.
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<PAGE> 20
(c) If a Participant or other Person authorizes the Bank to withdraw
the amount of the Initial Purchase Price from his or her Deposit Account, the
Bank shall have the right to make such withdrawal or to freeze funds equal to
the aggregate Initial Purchase Price upon receipt of the Order Form.
Notwithstanding any regulatory provisions regarding penalties for early
withdrawals from certificate accounts, the Bank may allow payment by means of
withdrawal from certificate accounts without the assessment of such penalties.
In the case of an early withdrawal of only a portion of such account, the
certificate evidencing such account shall be cancelled if any applicable
minimum balance requirement ceases to be met. In such case, the remaining
balance will earn interest at the regular passbook rate. However, where any
applicable minimum balance is maintained in such certificate account, the rate
of return on the balance of the certificate account shall remain the same as
prior to such early withdrawal. This waiver of the early withdrawal penalty
applies only to withdrawals made in connection with the purchase of Conversion
Stock and is entirely within the discretion of the Holding Company and the
Bank.
(d) The Bank shall pay interest, at not less than the passbook rate,
for all amounts paid in cash, by check or money order to purchase shares of
Conversion Stock in the Subscription Offering and the Community Offering from
the date payment is received until the date the Conversion is completed or
terminated.
(e) The Bank shall not knowingly loan funds or otherwise extend
credit to any Participant or other Person to purchase Conversion Stock.
(f) Each share of Conversion Stock shall be non-assessable upon
payment in full of the Actual Purchase Price.
14. ACCOUNT HOLDERS IN NONQUALIFIED STATES OR FOREIGN
COUNTRIES.
The Holding Company and the Bank shall make reasonable efforts to comply
with the securities laws of all jurisdictions in the United States in which
Participants reside. However, no Participant will be offered or receive any
Conversion Stock under the Plan if such Participant resides in a foreign
country or in a jurisdiction of the United States with respect to which all of
the following apply: (a) there are few Participants otherwise eligible to
subscribe for shares under this Plan who reside in such jurisdiction; (b) the
granting of Subscription Rights or the offer or sale of shares of Conversion
Stock to such Participants would require the Holding Company or the Bank or
their respective Directors and Officers, under the laws of such jurisdiction,
to register as a broker or dealer, salesman or selling agent or to register or
otherwise qualify the Conversion Stock for sale in such jurisdiction, or the
Holding Company or the Bank would be required to qualify as a foreign
corporation or file a consent to service of process in such jurisdiction; and
(c) such registration or qualification in the judgment of the Holding Company
and the Bank would be impracticable or unduly burdensome for reasons of cost or
otherwise.
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<PAGE> 21
15. VOTING RIGHTS OF STOCKHOLDERS.
Following Conversion, voting rights with respect to the Bank shall be
held and exercised exclusively by the Holding Company as holder of the Bank's
voting capital stock and voting rights with respect to the Holding Company
shall be held and exercised exclusively by the holders of the Holding Company's
voting capital stock. No Person shall have any rights as a stockholder of the
Holding Company unless and until the Conversion Stock has been issued to such
Person.
16. LIQUIDATION ACCOUNT.
(a) At the time of Conversion, the Bank shall establish a liquidation
account in an amount equal to the Bank's net worth as reflected in its latest
statement of financial condition contained in the final prospectus utilized in
the Conversion. The function of the liquidation account will be to preserve
the rights of certain holders of Deposit Accounts in the Bank who maintain such
accounts in the Bank following Conversion to a priority to distributions in the
unlikely event of a liquidation of the Bank subsequent to Conversion.
(b) The liquidation account shall be maintained for the benefit of
Eligible Account Holders and Supplemental Eligible Account Holders, if any, who
maintain their Deposit Accounts in the Bank after Conversion. Each such
account holder will, with respect to each Deposit Account held, have a related
inchoate interest in a portion of the liquidation account balance, which
interest will be referred to in this Section 16 as the "subaccount balance."
All Deposit Accounts having the same social security number will be aggregated
for purposes of determining the initial subaccount balance with respect to such
Deposit Accounts, except as provided in Section 16(d) hereof.
(c) In the event of a complete liquidation of the Bank subsequent to
Conversion (and only in such event), each Eligible Account Holder and
Supplemental Eligible Account Holder, if any, shall be entitled to receive a
liquidation distribution from the liquidation account in the amount of the then
current subaccount balances for Deposit Accounts then held (adjusted as
described below) before any liquidation distribution may be made with respect
to the capital stock of the Bank. No merger, consolidation, sale of bulk
assets or similar combination transaction with another FDIC-insured institution
in which the Bank is not the surviving entity shall be considered a complete
liquidation for this purpose. In any such transaction, the liquidation account
shall be assumed by the surviving entity.
(d) The initial subaccount balance for a Deposit Account held by an
Eligible Account Holder and Supplemental Eligible Account Holder, if any, shall
be determined by multiplying the opening balance in the liquidation account by
a fraction, of which the numerator is the amount of the Qualifying Deposits of
such account holder and the denominator is the total amount of Qualifying
Deposits of all Eligible Account Holders and, if applicable, Supplemental
Eligible Account Holders. For Deposit Accounts in existence at both the
Eligibility Record Date and the Supplemental Eligibility Record Date, if
applicable, separate initial subaccount balances shall be determined on the
basis of the
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<PAGE> 22
Qualifying Deposits in such Deposit Accounts on each such record date. Initial
subaccount balances shall not be increased, and shall be subject to downward
adjustment as provided below.
(e) If the aggregate deposit balance in any Deposit Account(s) of any
Eligible Account Holder or Supplemental Eligible Account Holder at the close of
business on any December 31 annual closing date, commencing December 31, 1997,
is less than the lesser of (a) the deposit balance in such Deposit Account(s)
at the close of business on any other annual closing date subsequent to such
record dates or (b) the deposit balance in such Deposit Account(s) as of the
Eligibility Record Date or the Supplemental Eligibility Record Date, if any,
the subaccount balance for such Deposit Account(s) shall be adjusted by
reducing such subaccount balance in an amount proportionate to the reduction in
such deposit balance. In the event of such a downward adjustment, the
subaccount balance shall not be subsequently increased, notwithstanding any
increase in the deposit balance of the related Deposit Account(s). The
subaccount balance of an Eligible Account Holder or Supplemental Eligible
Account Holder, if any, shall be reduced to zero if such holder ceases to
maintain a Deposit Account at the Bank that has the same social security number
as appeared on his or her Deposit Account(s) at the Eligibility Record Date or,
if applicable, the Supplemental Eligibility Record Date.
(f) Subsequent to Conversion, the Bank may not pay cash dividends
generally on deposit accounts and/or capital stock of the Bank, or repurchase
any of the capital stock of the Bank, if such dividend or repurchase would
reduce the Bank's net worth below the aggregate amount of the then current
subaccount balances for Deposit Accounts then held; otherwise, the existence of
the liquidation account shall not operate to restrict the use or application of
any of the net worth accounts of the Bank.
(g) For purposes of this Section 16, a Deposit Account includes a
predecessor or successor account which is held only by an account holder with
the same social security number.
17. TRANSFER OF DEPOSIT ACCOUNTS.
Each Deposit Account in the Bank at the time of the consummation of the
Conversion shall become, without further action by the holder, a Deposit
Account in the Bank equivalent in withdrawable amount to the withdrawal value
(as adjusted to give effect to any withdrawal made for the purchase of
Conversion Stock), and subject to the same terms and conditions (except as to
voting and liquidation rights) as such Deposit Account in the Bank immediately
preceding consummation of the Conversion. Holders of Deposit Accounts in the
Bank shall not, as such holders, have any voting rights.
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<PAGE> 23
18. REQUIREMENTS FOLLOWING CONVERSION FOR REGISTRATION,
MARKET MAKING AND STOCK EXCHANGE LISTING.
In connection with the Conversion, the Holding Company shall register
its common stock pursuant to the Securities Exchange Act of 1934, as amended,
and shall undertake not to deregister such stock for a period of three years
thereafter. The Holding Company also shall use its best efforts to (i)
encourage and assist a market maker to establish and maintain a market for its
common stock; and (ii) list its common stock on a national or regional
securities exchange or to have quotations for its common stock disseminated on
the Nasdaq Stock Market.
19. DIRECTORS AND OFFICERS OF THE BANK.
Each person serving as a Director or Officer of the Bank at the time of
the Conversion shall continue to serve as a Director or Officer of the Bank for
the balance of the term for which the person was elected prior to the
Conversion, and until a successor is elected and qualified.
20. REQUIREMENTS FOR STOCK PURCHASES BY DIRECTORS AND
OFFICERS FOLLOWING CONVERSION.
For a period of three years following the Conversion, the Directors and
Officers of the Holding Company and the Bank and their Associates may not
purchase, without the prior written approval of the OTS, the Holding Company
Common Stock except from a broker or dealer registered with the SEC. This
prohibition shall not apply, however, to (i) a negotiated transaction arrived
at by direct negotiation between buyer and seller and involving more than 1% of
the outstanding common stock of the Holding Company, (ii) purchases of stock
made by and held by any Tax-Qualified Employee Stock Benefit Plan (and
purchases of stock made by and held by any Non-Tax-Qualified Employee Stock
Benefit Plan following receipt of stockholder approval of such plan) that may
be attributable to individual Officers or Directors and (iii) the exercise of
any options pursuant to any stock benefit plan of the Holding Company.
The foregoing restriction on purchases of Holding Company Common Stock
shall be in addition to any restrictions that may be imposed by federal and
state securities laws.
21. RESTRICTIONS ON TRANSFER OF STOCK.
All shares of the Conversion Stock which are purchased by Persons other
than Directors and Officers shall be transferable without restriction, except
in connection with a transaction proscribed by Section 22 of this Plan. Shares
of Conversion Stock purchased by Directors and Officers of the Holding Company
and the Bank on original issue from the Holding Company (by subscription or
otherwise) shall be subject to the restriction that such shares shall not be
sold or otherwise disposed of for value for a period of one year following the
date of purchase, except for any disposition of such shares following the death
of the
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<PAGE> 24
original purchaser or pursuant to any merger or similar transaction approved by
the OTS. The shares of Conversion Stock issued by the Holding Company to
Directors and Officers shall bear the following legend giving appropriate
notice of such one-year restriction:
"The shares of stock evidenced by this Certificate are restricted as to
transfer for a period of one year from the date of this Certificate
pursuant to Part 563b of the Rules and Regulations of the Office of
Thrift Supervision. These shares may not be transferred during such
one-year period without a legal opinion of counsel for the Company that
said transfer is permissible under the provisions of applicable law and
regulation. This restrictive legend shall be deemed null and void after
one year from the date of this Certificate."
In addition, the Holding Company shall give appropriate instructions to
the transfer agent for the Holding Company Common Stock with respect to the
applicable restrictions relating to the transfer of restricted stock. Any
shares issued at a later date as a stock dividend, stock split or otherwise
with respect to any such restricted stock shall be subject to the same holding
period restrictions as may then be applicable to such restricted stock.
The foregoing restriction on transfer shall be in addition to any
restrictions on transfer that may be imposed by federal and state securities
laws.
22. RESTRICTIONS ON ACQUISITION OF STOCK OF THE HOLDING COMPANY.
Upon consummation of the Conversion, the certificate of incorporation of
the Holding Company shall prohibit any Person together with Associates or group
of Persons acting in concert from offering to acquire or acquiring, directly or
indirectly, beneficial ownership of more than 10% of any class of equity
securities of the Holding Company, or of securities convertible into more than
10% of any such class, for such period of time following completion of the
Conversion as may be determined by the Board of Directors of the Holding
Company. The certificate of incorporation of the Holding Company also shall
provide that all equity securities beneficially owned by any Person in excess
of 10% of any class of equity securities shall be considered "excess shares,"
and that excess shares 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. The foregoing
restrictions shall not apply to (i) any offer with a view toward public resale
made exclusively to the Holding Company by underwriters or a selling group
acting on its behalf, (ii) the purchase of shares by a Tax-Qualified Employee
Stock Benefit Plan established for the benefit of the employees of the Holding
Company and its subsidiaries which is exempt from approval requirements under
12 C.F.R. Section 574.3(c)(1)(vi) or any successor thereto, and (iii) any offer
or acquisition approved in advance by a specified affirmative vote of the
entire Board of Directors of the Holding Company. Directors, Officers or
employees of the Holding Company or the Bank or any subsidiary thereof shall
not be deemed to be Associates or a group acting in concert with respect to
their individual acquisitions of any class of equity securities of the Holding
Company solely as a result of their capacities as such.
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23. ADOPTION OF FEDERAL STOCK CHARTER AND BYLAWS.
As part of the Conversion, the Bank shall take all appropriate steps to
adopt a federal stock charter and bylaws to authorize the issuance of capital
stock and otherwise to read in a form consistent with a federally chartered
stock form savings association.
24. TAX RULINGS OR OPINIONS.
Consummation of the Conversion is expressly conditioned upon prior
receipt by the Bank of either a ruling or an opinion of counsel with respect to
federal tax laws, and either a ruling or an opinion of counsel with respect to
New York tax laws, to the effect that consummation of the transactions
contemplated hereby will not result in a taxable reorganization under the
provisions of the applicable codes or otherwise result in any adverse tax
consequences to the Holding Company, the Bank and its account holders receiving
Subscription Rights before or after the Conversion, except in each case to the
extent, if any, that Subscription Rights are deemed to have fair market value
on the date such rights are issued.
25. STOCK COMPENSATION PLANS.
(a) The Holding Company and the Bank are authorized to adopt
Tax-Qualified Employee Stock Benefit Plans in connection with the Conversion,
including, without limitation, the ESOP. Subsequent to the Conversion, the
Holding Company and the Bank are authorized to adopt Non-Tax Qualified Employee
Stock Benefit Plans, including without limitation, stock option plans and
restricted stock plans, provided however that, with respect to any such plan
implemented during the one-year period subsequent to the date of consummation
of the Conversion, any such plan: (i) shall be disclosed in the proxy
solicitation materials for the Special Meeting of Members and in the
Prospectus; (ii) in the case of stock option plans, shall have a total number
of shares of common stock for which options may be granted of not more than 10%
of the amount of shares issued in the Conversion; (iii) in the case of
management or employee recognition or grant plans, shall have a total number of
shares of common stock of not more than 4% of the amount of shares issued in
the Conversion; (iv) in the case of stock option plans and employee recognition
or grant plans, shall be submitted for approval by the holders of the Holding
Company Common Stock no earlier than six months following consummation of the
Conversion; and (v) shall comply with all other applicable requirements of the
OTS.
(b) Existing as well as any newly created Tax-Qualified Employee
Stock Benefit Plans may purchase shares of Conversion Stock in the Offerings,
to the extent permitted by the terms of such benefit plans and this Plan.
(c) The Holding Company and the Bank are authorized to enter into
employment or severance agreements with their executive officers.
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<PAGE> 26
26. DIVIDEND AND REPURCHASE RESTRICTIONS ON STOCK.
(a) Following consummation of the Conversion, any repurchases of
shares of capital stock by the Holding Company will be made in accordance with
then applicable laws and regulations.
(b) The Bank may not declare or pay a cash dividend on, or repurchase
any of, its capital stock if the effect thereof would cause the regulatory
capital of the Bank to be reduced below the amount required for the liquidation
account. Any dividend declared or paid on, or repurchase of, the Bank's
capital stock shall be made in compliance with Section 563.134 of the
Regulations Applicable to All Savings Associations, or any successor thereto.
27. PAYMENT OF FEES TO BROKERS.
The Bank may elect to offer to pay fees on a per share basis to
securities brokers who assist Persons in determining to purchase shares in the
Offerings.
28. ESTABLISHMENT AND FUNDING OF CHARITABLE FOUNDATION.
As part of the Conversion, the Holding Company and the Bank intend to
establish a charitable foundation that will qualify as an exempt organization
under Section 501(c)(3) of the Code (the "Foundation"). To fund the
Foundation, the Bank will contribute funds prior to completion of the
Conversion or, immediately subsequent to the Conversion, the Holding Company
will contribute authorized but unissued shares of Holding Company Common Stock
in an amount not to exceed 8% of the number of shares of Conversion Stock
issued in the Conversion (provided, however, that such amount may be reduced by
the Holding Company and the Bank), or a combination thereof, subject to the
receipt of any required regulatory approval or consent. The Foundation is
being formed in connection with the Conversion in order to complement the
Bank's existing community reinvestment activities and to share with the Bank's
local community a part of the Bank's financial success as a locally
headquartered, community minded, financial services institution.
The Foundation will be dedicated to the promotion of charitable purposes
including community development, grants, or donations to support housing
assistance and affordable housing programs, not-for-profit community groups and
other similar types of organizations or civic minded projects. In order to
serve the purposes for which it was formed and maintain its qualification under
Section 501(c)(3) of the Code, the Foundation may sell, on an annual basis, a
limited portion of the Holding Company Common Stock contributed to it by the
Holding Company.
The Board of Directors of the Foundation may be comprised of individuals
who are Officers and/or Directors of the Bank or the Holding Company. The
Board of Directors of the Foundation will be responsible for establishing the
polices of the Foundation with respect to grants or donations, consistent with
the stated purposes of the Foundation.
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<PAGE> 27
The establishment and funding of the Foundation as part of the
Conversion and Reorganization is subject to the receipt of any required
regulatory approval or consent.
29. EFFECTIVE DATE.
The effective date of the Conversion shall be the date of the closing of
the sale of all shares of Conversion Stock. The closing of the sale of all
shares of Conversion Stock sold in the Offerings shall occur simultaneously and
shall be conditioned upon the prior receipt of all requisite regulatory and
other approvals.
30. AMENDMENT OR TERMINATION OF THE PLAN.
If deemed necessary or desirable by the Board of Trustees or the Board
of Directors, as the case may be, of the Bank, this Plan may be substantively
amended, as a result of comments from regulatory authorities or otherwise, at
any time prior to the solicitation of proxies from Members to vote on the Plan
and at any time thereafter with the concurrence of the OTS. Any amendment to
this Plan made after approval by the Members with the concurrence of the OTS
shall not necessitate further approval by the Members unless otherwise required
by the OTS. This Plan shall terminate if the sale of all shares of Conversion
Stock is not completed within 24 months from the date of the Special Meeting
(subject to extension by the OTS). Prior to the Special Meeting, this Plan may
be terminated by the Board of Directors of the Bank without approval of the
OTS; after the Special Meeting, the Board of Directors may terminate this Plan
only with the approval of the OTS.
31. INTERPRETATION OF THE PLAN.
All interpretations of this Plan and application of its provisions to
particular circumstances by a majority of the Board of Directors of the Holding
Company and the Bank shall be final, subject to the authority of the OTS.
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<PAGE> 1
Exhibit 3.1
CERTIFICATE OF INCORPORATION OF
STATEN ISLAND BANCORP, INC.
ARTICLE 1. NAME. The name of the corporation is Staten Island
Bancorp, Inc. (hereinafter referred to as the "Corporation").
ARTICLE 2. REGISTERED OFFICE AND REGISTERED AGENT. The address of
the registered office of the Corporation in the State of Delaware is 1209
Orange Street, in the city of Wilmington, county of New Castle. The name of
the registered agent at such address is The Corporation Trust Company.
ARTICLE 3. NATURE OF BUSINESS. The purpose of the Corporation is to
engage in any lawful act or activity for which a corporation may be organized
under the General Corporation Law of the State of Delaware.
ARTICLE 4. CAPITAL STOCK. The total number of shares of capital
stock which the Corporation has authority to issue is 125,000,000, of which
25,000,000 shall be preferred stock, $.01 par value per share (hereinafter
the "Preferred Stock"), and 100,000,000 shall be common stock, par value $.01
per share (hereinafter the Common Stock).
The Board of Directors is hereby expressly authorized, by resolution or
resolutions to provide, out of the unissued shares of Preferred Stock, for
series of Preferred Stock. Before any shares of any such series are issued,
the Board of Directors shall fix, and hereby is expressly empowered to fix, by
resolution or resolutions, the following provisions of the shares thereof:
(a) the designation of such series, the number of shares to
constitute such series and the stated value thereof if different from the par
value thereof;
(b) whether the shares of such series shall have voting rights, in
addition to any voting rights provided by law, and, if so, the terms of such
voting rights, which may be general or limited;
(c) the dividends, if any, payable on such series, whether any such
dividends shall be cumulative, and, if so, from what dates, the conditions and
dates upon which such dividends shall be payable, and the preference or
relation which such dividends shall bear to the dividends payable on any shares
of stock of any other class or any other series of this class;
(d) whether the shares of such series shall be subject to redemption
by the Corporation, and, if so, the times, prices and other conditions of such
redemption;
(e) the amount or amounts payable upon shares of such series upon,
and the rights of the holders of such series in, the voluntary or involuntary
liquidation, dissolution or winding up of the Corporation, or upon any
distribution of the assets of the Corporation;
<PAGE> 2
(f) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and manner
in which any such retirement or sinking fund shall be applied to the purchase
or redemption of the shares of such series for retirement or other corporate
purposes and the terms and provisions relative to the operation thereof;
(g) whether the shares of such series shall be convertible into, or
exchangeable for, shares of stock of any other class or any other series of
this class or any other securities, and, if so, the price or prices or the rate
or rates of conversion or exchange and the method, if any, of adjusting the
same, and any other terms and conditions of conversion or exchange;
(h) the limitations and restrictions, if any, to be effective while
any shares of such series are outstanding upon the payment of dividends or the
making of other distributions on, and upon the purchase, redemption or other
acquisition by the Corporation of, the Common Stock or shares of stock of any
other class or any other series of this class;
(i) the conditions or restrictions, if any, upon the creation of
indebtedness of the Corporation or upon the issue of any additional stock,
including additional shares of such series or of any other series of this class
or of any other class; and
(j) any other powers, preferences and relative, participating,
optional and other special rights, and any qualifications, limitations and
restrictions thereof.
The powers, preferences and relative, participating, optional and other
special rights of each series of Preferred Stock, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of any and
all other series at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of
such series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall accrue and/or be
cumulative.
ARTICLE 5. INCORPORATOR. The name and mailing address of the sole
incorporator is as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Staten Island Savings Bank 15 Beach Street
Staten Island, New York
10304
</TABLE>
ARTICLE 6. PREEMPTIVE RIGHTS. No holder of the capital stock of the
Corporation shall be entitled as such, as a matter of right, to subscribe for
or purchase any part of any new or additional issue of stock of any class
whatsoever of the Corporation, or of securities convertible into stock of any
class whatsoever, whether now or hereafter authorized, or whether issued for
cash or other consideration or by way of a dividend.
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<PAGE> 3
ARTICLE 7. DIRECTORS. The business and affairs of the Corporation
shall be managed by or under the direction of a Board of Directors. Except as
otherwise fixed pursuant to the provisions of Article 4 hereof relating to the
rights of the holders of any class or series of stock having a preference over
the Common Stock as to dividends or upon liquidation to elect additional
directors, the number of directors shall be determined as stated in the
Corporation's Bylaws, as may be amended from time to time.
A. CLASSIFICATION AND TERM. The Board of Directors, other
than those who may be elected by the holders of any class or series of
stock having preference over the Common Stock as to dividends or upon
liquidation, shall be divided into three classes as nearly equal in
number as possible, with one class to be elected annually. The term of
office of the initial directors shall be as follows: the term of
directors of the first class shall expire at the first annual meeting of
stockholders after the effective date of this Certificate of
Incorporation; the term of office of the directors of the second class
shall expire at the second annual meeting of stockholders after the
effective date of this Certificate of Incorporation; and the term of
office of the third class shall expire at the third annual meeting of
stockholders after the effective date of this Certificate of
Incorporation; and, as to directors of each class, when their respective
successors are elected and qualified. At each annual meeting of
stockholders, directors elected to succeed those whose terms are
expiring shall be elected for a term of office to expire at the third
succeeding annual meeting of stockholders, unless a different term of
office is necessary to comply with the requirements of the first
sentence of this Article 7.A., and until their respective successors are
elected and qualified. Stockholders of the Corporation shall not be
permitted to cumulate their votes for the election of directors.
B. VACANCIES. Except as otherwise fixed pursuant to the
provisions of Article 4 hereof relating to the rights of the holders of
any class or series of stock having a preference over the Common Stock
as to dividends or upon liquidation to elect directors, any vacancy
occurring in the Board of Directors, including any vacancy created by
reason of an increase in the number of directors, may be filled by a
majority vote of the directors then in office, whether or not a quorum
is present, or by a sole remaining director, and any director so chosen
shall hold office for the remainder of the term to which the director
has been selected and until such director's successor shall have been
elected and qualified. When the number of directors is changed, the
Board of Directors shall determine the class or classes to which the
increased or decreased number of directors shall be apportioned,
provided that no decrease in the number of directors shall shorten the
term of any incumbent director.
C. REMOVAL. Subject to the rights of any class or series of
stock having preference over the Common Stock as to dividends or upon
liquidation to elect directors, any director (including persons elected
by directors to fill vacancies in the Board of Directors) may be removed
from office only with cause by an affirmative vote of not less than 80%
Voting Shares (as defined in Article 12 hereof after giving
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<PAGE> 4
effect to Article 12.D. hereof) at a duly constituted meeting of
stockholders called expressly for such purpose. Cause for removal shall
exist only if the director whose removal is proposed has been either
declared incompetent by an order of a court, convicted of a felony or of
an offense punishable by imprisonment for a term of more than one year
by a court of competent jurisdiction, or deemed liable by a court of
competent jurisdiction for gross negligence or misconduct in the
performance of such director's duties to the Corporation. At least 30
days prior to such meeting of stockholders, written notice shall be sent
to the director whose removal will be considered at the meeting.
D. EVALUATION OF ACQUISITION PROPOSALS. The Board of
Directors of the Corporation, when evaluating any offer to the
Corporation or to the shareholders of the Corporation from another party
to (a) purchase for cash, or exchange any securities or property for,
any outstanding equity securities of the Corporation, (b) merge or
consolidate the Corporation with another corporation or (c) purchase or
otherwise acquire all or substantially all of the properties and assets
of the Corporation, may, consistent with the exercise of its fiduciary
duties and in connection with the exercise of its judgment in
determining what is in the best interest of the Corporation and its
shareholders, give due consideration to the extent permitted by law not
only to the price or other consideration being offered, but also to all
other relevant factors including, without limitation, the financial and
managerial resources and future prospects of the other party, the
possible effects on the business of the Corporation and its subsidiaries
and on the employees, customers, suppliers and creditors of the
Corporation and its subsidiaries, the effects on the ability of the
Corporation to fulfill its corporate objectives as a holding company and
on the ability of its subsidiary savings bank to fulfill its objectives
as a savings bank, and the effects on the communities in which the
Corporation's and its subsidiaries' facilities are located.
ARTICLE 8. MEETINGS OF STOCKHOLDERS. Any action required or
permitted by the General Corporation Law of the State of Delaware or this
Certificate of Incorporation to be approved by or consented to by stockholders
of the Corporation, must be effected at a duly called annual or special meeting
of stockholders and may not be effected by written consent by such stockholders
in lieu of a meeting of stockholders. Except as otherwise required by law and
subject to the rights of the holders of any class or series of Preferred Stock,
special meetings of the stockholders may be called only by the Board of
Directors pursuant to a resolution approved by the affirmative vote of at least
three-fourths of the directors then in office.
ARTICLE 9. LIABILITY OF DIRECTORS AND OFFICERS. The personal
liability of the directors and officers of the Corporation for monetary damages
shall be eliminated to the fullest extent permitted by the General Corporation
Law of the State of Delaware as it exists on the effective date of this
Certificate of Incorporation or as such law may be thereafter in effect. No
amendment, modification or repeal of this Article 9 shall adversely affect the
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<PAGE> 5
rights provided hereby with respect to any claim, issue or matter in any
proceeding that is based in any respect on any alleged action or failure to act
prior to such amendment, modification or repeal.
ARTICLE 10. INDEMNIFICATION. The Corporation shall indemnify its
directors, officers, employees, agents and former directors, officers,
employees and agents, and any other persons serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
association, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees, judgments, fines and amounts paid in
settlement) incurred in connection with any pending or threatened action, suit
or proceeding, whether civil, criminal, administrative or investigative, with
respect to which such director, officer, employee, agent or other person is a
party, or is threatened to be made a party, to the full extent permitted by the
General Corporation Law of the State of Delaware, provided, however, that the
Corporation shall not be liable for any amounts which may be due to any person
in connection with a settlement of any action, suit or proceeding effected
without its prior written consent or any action, suit or proceeding initiated
by any person seeking indemnification hereunder without its prior written
consent. The indemnification provided herein (i) shall not be deemed exclusive
of any other right to which any person seeking indemnification may be entitled
under any bylaw, agreement or vote of shareholders or disinterested directors
or otherwise, both as to action in his or her official capacity and as to
action in any other capacity, and (ii) shall inure to the benefit of the heirs,
executors and administrators of any such person. The Corporation shall have
the power, but shall not be obligated, to purchase and maintain insurance on
behalf of any person or persons enumerated above against any liability asserted
against or incurred by them or any of them arising out of their status as
corporate directors, officers, employees, or agents whether or not the
Corporation would have the power to indemnify them against such liability under
the provisions of this Article 10.
ARTICLE 11. STOCKHOLDER APPROVAL OF CERTAIN ACTIONS. Except as set
forth in the following sentence, any action required or permitted to be taken
by the stockholders of the Corporation pursuant to Subchapter IX (Merger or
Consolidation) and Subchapter X (Sale of Assets, Dissolution and Winding Up) of
the General Corporation Law of the State of Delaware, or any successors
thereto, shall be taken upon the affirmative vote of at least 80% of the Voting
Shares (as defined in Article 12 hereof and after giving effect to Article
12.D. hereof), as well as such additional vote of the Preferred Stock as may be
required by the provisions of any series thereof. Notwithstanding the
preceding sentence, if any such action is recommended by at least two thirds of
the entire Board of Directors (including any vacancies), the 80% stockholder
vote set forth in the preceding sentence will not be applicable, and, in such
event, the action will require only such affirmative vote as is required by
law.
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<PAGE> 6
ARTICLE 12. RESTRICTIONS ON OFFERS AND ACQUISITIONS OF THE
CORPORATION'S EQUITY SECURITIES.
A. DEFINITIONS.
(a) Acquire. The term "Acquire" includes every type of
acquisition, whether effected by purchase, exchange, operation of law or
otherwise.
(b) Acting in Concert. The term "Acting in Concert" means (i)
knowing participation in a joint activity or conscious parallel action towards
a common goal whether or not pursuant to an express agreement, or (ii) a
combination or pooling of voting or other interests in the securities of an
issuer for a common purpose pursuant to any contract, understanding,
relationship, agreement or other arrangement, whether written or otherwise.
(c) Affiliate. An "Affiliate" of, or a Person "affiliated
with," a specified Person, means a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Person specified.
(d) Associate. The term "Associate" used to indicate a
relationship with any Person means:
(i) Any corporation or organization (other than the
Corporation or a Subsidiary of the Corporation), or any
subsidiary or parent thereof, of which such Person is a director,
officer or partner or is, directly or indirectly, the Beneficial
Owner of 10% or more of any class of equity securities;
(ii) Any trust or other estate in which such Person has a
10% or greater beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity, provided,
however, such term shall not include any employee stock benefit
plan of the Corporation or a Subsidiary of the Corporation in
which such Person has a 10% or greater beneficial interest or
serves as a trustee or in a similar fiduciary capacity;
(iii) Any relative or spouse of such Person (or any
relative of such spouse) who has the same home as such Person or
who is a director or officer of the Corporation or a Subsidiary
of the Corporation (or any subsidiary or parent thereof); or
(iv) Any investment company registered under the
Investment Company Act of 1940 for which such Person or any
Affiliate or Associate of such Person serves as investment
advisor.
(e) Beneficial Owner (including Beneficially Owned). A Person
shall be considered the "Beneficial Owner" of any shares of stock (whether or
not owned of record):
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<PAGE> 7
(i) With respect to which such Person or any Affiliate or
Associate of such Person directly or indirectly has or shares (A)
voting power, including the power to vote or to direct the voting
of such shares of stock, and/or (B) investment power, including
the power to dispose of or to direct the disposition of such
shares of stock;
(ii) Which such Person or any Affiliate or Associate of
such Person has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding or upon
the exercise of conversion rights, exchange rights, warrants or
options, or otherwise, and/or (B) the right to vote pursuant to
any agreement, arrangement or understanding (whether such right
is exercisable immediately or only after the passage of time); or
(iii) Which are Beneficially Owned within the meaning of
(i) or (ii) of this Article 12.A(e) by any other Person with
which such first-mentioned Person or any of its Affiliates or
Associates either (A) has any agreement, arrangement or
understanding, written or oral, with respect to acquiring,
holding, voting or disposing of any shares of stock of the
Corporation or any Subsidiary of the Corporation or acquiring,
holding or disposing of all or substantially all, or any
Substantial Part, of the assets or business of the Corporation or
a Subsidiary of the Corporation, or (B) is Acting in Concert.
For the purpose only of determining whether a Person is the
Beneficial Owner of a percentage specified in this Article 10 of
the outstanding Voting Shares, such shares shall be deemed to
include any Voting Shares which may be issuable pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants, options or
otherwise and which are deemed to be Beneficially Owned by such
Person pursuant to the foregoing provisions of this Article
12.A(e), but shall not include any other Voting Shares which may
be issuable in such manner.
(f) Offer. The term "Offer" shall mean every offer to buy or
acquire, solicitation of an offer to sell, tender offer or request or
invitation for tender of, a security or interest in a security for value;
provided that the term "Offer" shall not include (i) inquiries directed solely
to the management of the Corporation and not intended to be communicated to
stockholders which are designed to elicit an indication of management's
receptivity to the basic structure of a potential acquisition with respect to
the amount of cash and or securities, manner of acquisition and formula for
determining price, or (ii) non-binding expressions of understanding or letters
of intent with the management of the Corporation regarding the basic structure
of a potential acquisition with respect to the amount of cash and or
securities, manner of acquisition and formula for determining price.
(g) Person. The term "Person" shall mean any individual,
partnership, corporation, limited liability company, association, trust, group
or other entity. When two
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<PAGE> 8
or more Persons act as a partnership, limited partnership, syndicate,
association or other group for the purpose of acquiring, holding or disposing
of shares of stock, such partnership, syndicate, associate or group shall be
deemed a "Person."
(h) Substantial Part. The term "Substantial Part" as used with
reference to the assets of the Corporation or of any Subsidiary means assets
having a value of more than 10% of the total consolidated assets of the
Corporation and its Subsidiaries as of the end of the Corporation's most recent
fiscal year ending prior to the time the determination is being made.
(i) Subsidiary. "Subsidiary" means any corporation of which a
majority of any class of equity security is owned, directly or indirectly, by
the Person in question.
(j) Voting Shares. "Voting Shares" shall mean shares of the
Corporation entitled to vote generally in an election of directors.
(k) Certain Determinations With Respect to Article 12. A
majority of the directors shall have the power to determine for the purposes of
this Article 12, on the basis of information known to them and acting in good
faith: (i) the number of Voting Shares of which any Person is the Beneficial
Owner, (ii) whether a Person is an Affiliate or Associate of another Person,
(iii) whether a Person has an agreement, arrangement or understanding with
another as to the matters referred to in the definition of "Beneficial Owner"
as hereinabove defined, and (iv) such other matters with respect to which a
determination is required under this Article 12. Any such determinations made
by the Board of Directors of the Corporation pursuant to this Article 12 shall
be conclusive and binding upon the Corporation and its stockholders. In order
to carry out its responsibilities under this Article 12, the Board of Directors
shall have the right to demand that any person who is reasonably believed to be
the Beneficial Owner of Excess Shares shall supply the Corporation with
complete information as to (x) the record owners of all shares of equity
securities Beneficially Owned by such Person and (y) any other factual matter
relating to the applicability or effect of this Article 12 as may be reasonably
requested by the Board of Directors.
(l) Directors, Officers or Employees. Directors, officers or
employees of the Corporation or any Subsidiary thereof shall not be deemed to
be a group with respect to their individual acquisitions of any class of equity
securities of the Corporation solely as a result of their capacities as such.
B. RESTRICTIONS. Upon the effective date of the reorganization of
Staten Island Savings Bank (the "Bank") as a subsidiary of the Corporation, no
Person shall directly or indirectly Offer to Acquire or Acquire the Beneficial
Ownership of (i) more than 10% of the issued and outstanding shares of any
class of an equity security of the Corporation, or (ii) any securities
convertible into, or exercisable for, any equity securities of the Corporation
if, assuming conversion or exercise by such Person of all securities of which
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such Person is the Beneficial Owner which are convertible into, or exercisable
for, such equity securities (but of no securities convertible into, or
exercisable for, such equity securities of which such Person is not the
Beneficial Owner), such Person would be the Beneficial Owner of more than 10%
of any class of an equity security of the Corporation.
C. EXCLUSIONS. The foregoing restrictions shall not apply to (i)
any Offer with a view toward public resale made exclusively to the Corporation
by underwriters or a selling group acting on its behalf, (ii) any tax-qualified
employee benefit plan or arrangement established by the Corporation and any
trustee of such a plan or arrangement, and (iii) any other Offer or acquisition
approved in advance by the affirmative vote of two-thirds of the Corporation's
entire Board of Directors (including any vacancies).
D. REMEDIES. In the event that shares are Acquired in violation of
this Article 12, all shares Beneficially Owned by any Person in excess of 10%
shall be considered "Excess Shares" and (i) shall not be counted as shares
entitled to vote and shall not be voted by any Person or counted as Voting
Shares in connection with any matters submitted to stockholders for a vote,
(ii) the Corporation is authorized to refuse to recognize a transfer or
attempted transfer of any shares of the Corporation's equity securities to any
Person who is the Beneficial Owner, or as the result of such transfer would
become the Beneficial Owner, of Excess Shares and (iii) the Board of Directors
may cause such Excess Shares to be transferred to an independent trustee for
sale on the open market or otherwise, with the expenses of such trustee to be
paid out of the proceeds of the sale.
For purposes of ensuring compliance with Article 12.B, in the event any
partnership, corporation, limited liability company, association or trust is
deemed to Beneficially Own more than 5% of any class of the Corporation's
stock, either by itself or together with one or more other Persons who is an
Affiliate of or Acting in Concert with such entity or who is a member of any
group with such entity with respect to the Corporation's stock, then the
Corporation shall be entitled upon written request to such entity to receive
information regarding the name and address of, and the class and number of
shares of Corporation stock which are Beneficially Owned by, each partner in
such partnership, each director, executive officer and stockholder in such
corporation, each member in such limited liability company or association, and
each trustee and beneficiary of such trust, and in each case each Person
controlling such entity and each partner, director, executive officer,
stockholder, member or trustee of any entity which is ultimately in control of
such partnership, corporation, limited liability company, association or trust.
E. SEVERABILITY. In the event any provision (or portion thereof) of
this Article 12 shall be found to be invalid, prohibited or unenforceable for
any reason, the remaining provisions (or portions thereof) of this Article 12
shall remain in full force and effect, and shall be construed as if such
invalid, prohibited or unenforceable provision had been stricken herefrom or
otherwise rendered inapplicable, it being the intent of this Corporation and
its stockholders that each such remaining provision (or portion thereof) of
this Article 12
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remain, to the fullest extent permitted by law, applicable and enforceable as
to all stockholders.
ARTICLE 13. AMENDMENT OF CERTIFICATE OF INCORPORATION AND BYLAWS.
A. CERTIFICATE OF INCORPORATION. The Corporation reserves the right to
amend, alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by law, and all rights
conferred upon stockholders herein are granted subject to this reservation. No
amendment, addition, alteration, change or repeal of this Certificate of
Incorporation shall be made unless it is first approved by the Board of
Directors of the Corporation pursuant to a resolution adopted by the
affirmative vote of a majority of the directors then in office, and is
thereafter approved by the holders of at least 80% of the Voting Shares (as
defined in Article 12 hereof and after giving effect to Article 12.D. hereof),
voting together as a single class, as well as such additional vote of the
Preferred Stock as may be required by the provisions of any series thereof.
Notwithstanding the preceding sentence, any amendment to this Certificate of
Incorporation recommended for adoption by at least two thirds of the entire
Board of Directors (including any vacancies) shall, to the extent the General
Corporation Law of the State of Delaware requires stockholder approval of such
amendment, require the affirmative vote of a majority of the Voting Shares (as
defined in Article 12 hereof and after giving effect to Article 12.D. hereof),
voting together as a single class, as well as such additional vote of the
Preferred Stock as may be required by the provisions of any series thereof.
B. BYLAWS. The Board of Directors or stockholders may adopt, alter,
amend or repeal the Bylaws of the Corporation. Such action by the Board of
Directors shall require the affirmative vote of a majority of the directors
then in office at any regular or special meeting of the Board of Directors.
Such action by the stockholders shall require the affirmative vote of at least
a majority of the Voting Shares (as defined in Article 12 hereof and after
giving effect to Article 12.D. hereof), as well as such additional vote of the
Preferred Stock as may be required by the provisions of any series thereof
provided, however, that the affirmative vote of at least 80% of the Voting
Shares (as defined in Article 12 hereof and after giving effect to Article
12.D. hereof), voting together as a single class, as well as such additional
vote of the Preferred Stock as may be required by the provisions of any series
thereof, shall be required to amend, alter, change or repeal any provision of,
or adopt any provision inconsistent with, Sections 2.4, 2.14, 4.1, 4.2, 4.3,
4.4, 4.5 and 4.15 and Article VI of the Bylaws.
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STATEN ISLAND SAVINGS BANK, being the sole Incorporator herein before
named, for the purpose of forming a corporation pursuant to the General
Corporation Law of the State of Delaware, does make this Certificate, hereby
declaring and certifying that this is the Incorporator's act and deed and that
the facts herein stated are true, and accordingly has caused this Certificate
to be signed on its behalf by the undersigned, thereunto duly authorized, on
the 24th day of July 1997.
STATEN ISLAND SAVINGS BANK
By: /s/ JAMES R. COYLE
------------------------------------
Name: James R. Coyle
Title: President and
Chief Operating Officer
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Exhibit 3.2
BYLAWS
OF
STATEN ISLAND BANCORP, INC.
ARTICLE I. OFFICES
1.1 Registered Office and Registered Agent. The registered office of
Staten Island Bancorp, Inc. ("Corporation") shall be located in the State of
Delaware at such place as may be fixed from time to time by the Board of
Directors upon filing of such notices as may be required by law, and the
registered agent shall have a business office identical with such registered
office.
1.2 Other Offices. The Corporation may have other offices within or
without the State of Delaware at such place or places as the Board of Directors
may from time to time determine.
ARTICLE II. STOCKHOLDERS' MEETINGS
2.1 Meeting Place. All meetings of the stockholders shall be held at
the principal place of business of the Corporation, or at such other place
within or without the State of Delaware as shall be determined from time to
time by the Board of Directors, and the place at which any such meeting shall
be held shall be stated in the notice of the meeting.
2.2 Annual Meeting. The annual meeting of the stockholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held each year on such date and time
as determined by the Board of Directors and stated in the notice of such
meeting.
2.3 Organization. Each meeting of the stockholders shall be presided
over by the Chairman of the Board, or in his absence by the President, or in
their absences, any other individual selected by the Board of Directors. The
Secretary, or in his absence a temporary Secretary, shall act as secretary of
each meeting of the stockholders. In the absence of the Secretary and any
temporary Secretary, the chairman of the meeting may appoint any person present
to act as secretary of the meeting. The chairman of any meeting of the
stockholders shall announce the date and time of the opening and the closing of
the polls for each matter upon which the stockholders will vote at a meeting
and, unless prescribed by law or regulation or unless the Board of Directors
has otherwise determined, shall determine the order of the business and the
procedure at the meeting, including such regulation of the manner of voting and
the conduct of discussions as seem to him in order.
<PAGE> 2
2.4 Special Meetings. Except as otherwise required by law and
subject to the rights of the holders of any class or series of Preferred Stock,
special meetings of the stockholders may be called only by the Board of
Directors pursuant to a resolution approved by the affirmative vote of at least
three-fourths of the directors then in office.
2.5 Notice.
(a) Notice of the time and place of the annual meeting of
stockholders shall be given by delivering personally or by mailing a written
notice of the same, not less than ten days and not more than sixty days prior
to the date of the meeting, to each stockholder of record entitled to vote at
such meeting. When any stockholders' meeting, either annual or special, is
adjourned for thirty days or more, or if a new record date is fixed for an
adjourned meeting of stockholders, notice of the adjourned meeting shall be
given as in the case of an original meeting. It shall not be necessary to give
any notice of the time and place of any meeting adjourned for less than thirty
days (unless a new record date is fixed therefor), other than an announcement
at the meeting at which such adjournment is taken. At the adjourned meeting
the Corporation may transact any business which might have been transacted at
the original meeting.
(b) Not less than ten days and not more than sixty days prior to the
meeting, a written notice of each special meeting of stockholders, stating the
place, day and hour of such meeting, and the purpose or purposes for which the
meeting is called, shall be either delivered personally or mailed to each
stockholder of record entitled to vote at such meeting.
2.6 Record List of Stockholders. At least ten days before each
meeting of stockholders, a complete record of the stockholders entitled to vote
at such meeting, or any adjournment thereof, shall be made, arranged in
alphabetical order, with the address of and number of shares registered in the
name of each, which record shall be kept open to the examination of any
stockholder, for a purpose germane to the meeting, in accordance with the
General Corporation Law ("GCL") of the State of Delaware. The record also
shall be kept open at the time and place of such meeting for the inspection of
any stockholder.
2.7 Quorum; Actions of Stockholders. Except as otherwise required by
law or the Corporation's Certificate of Incorporation:
(a) A quorum at any annual or special meeting of stockholders shall
consist of stockholders representing, either in person or by proxy, a majority
of the outstanding capital stock of the Corporation entitled to vote at such
meeting.
(b) In all matters other than the election of directors, the
affirmative vote of the majority of shares present in person or represented by
proxy at the meeting and entitled to vote on the subject matter shall be the
act of the stockholders. Directors shall be elected by a plurality of the
votes of the shares present in person or represented by proxy at the
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meeting and entitled to vote on the election of directors. If, at any meeting
of the stockholders, due to a vacancy or vacancies or otherwise, directors of
more than one class of the Board of Directors are to be elected, each class of
directors to be elected at the meeting shall be elected in a separate election
by a plurality vote.
2.8 Voting of Shares. Except as otherwise provided in these Bylaws
or to the extent that voting rights of the shares of any class or classes are
limited or denied by the Certificate of Incorporation, each stockholder, on
each matter submitted to a vote at a meeting of stockholders, shall have one
vote for each share of stock registered in his name on the books of the
Corporation.
2.9 Closing of Transfer Books and Fixing of the Record Date. For the
purpose of determining stockholders entitled to notice of or to vote at any
meeting of stockholders, or any adjournment thereof, or entitled to receive
payment of any dividend, the Board of Directors may provide that the stock
transfer books shall be closed for a stated period not to exceed 60 days nor
less than ten days preceding such meeting. In lieu of closing the stock
transfer books, the Board of Directors may fix in advance a record date for any
such determination of stockholders, which record date shall not precede the
date upon which the resolution fixing the record date is adopted by the Board
of Directors, and which record date shall not be more than sixty days and, in
case of a meeting of stockholders, not less than ten days prior to the date on
which the particular action requiring such determination of stockholders is to
be taken.
2.10 Proxies. A stockholder may vote either in person or by proxy
executed in writing by the stockholder or his duly authorized attorney-in-fact.
Without limiting the manner in which a stockholder may authorize another person
or persons to act for him as proxy, a stockholder may grant such authority in
the manner specified in Section 212(c) of the GCL (or any successor thereto).
No proxy shall be valid after three years from the date of its execution,
unless otherwise provided in the proxy.
2.11 Waiver of Notice. A waiver of any notice required to be given
any stockholder, signed by the person or persons entitled to such notice,
whether before or after the time stated therein for the meeting, shall be
equivalent to the giving of such notice. The attendance of any stockholder at
a meeting, in person or by proxy, shall constitute a waiver of notice by such
stockholder, except where a stockholder attends a meeting for the express
purpose of objecting at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or commenced.
2.12 Voting of Shares in the Name of Two or More Persons. When
ownership stands in the name of two or more persons, whether fiduciaries,
members of a partnership, joint tenants, tenants in common, tenants by the
entirety or otherwise, or if two or more persons have the same fiduciary
relationship respecting the same shares, unless the Secretary of the
Corporation is given written notice to the contrary and is furnished with a
copy of the instrument or order appointing them or creating the relationship
wherein it is so provided,
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at any meeting of the stockholders of the Corporation any one or more of such
stockholders may cast, in person or by proxy, all votes to which such ownership
is entitled. In the event an attempt is made to cast conflicting votes, in
person or by proxy, by the several persons in whose names shares of stock
stand, the vote or votes to which those persons are entitled shall be cast as
directed by a majority of those holding such stock and present in person or by
proxy at such meeting, but no votes shall be cast for such stock if a majority
cannot agree, except to the extent provided in Section 217(b)(3) of the GCL (or
any successor thereto).
2.13 Voting of Shares by Certain Holders. Shares standing in the name
of another corporation may be voted by an officer, agent or proxy as the bylaws
of such corporation may prescribe, or, in the absence of such provision, as the
Board of Directors of such corporation may determine. Shares held by an
administrator, executor, guardian or conservator may be voted by him, either in
person or by proxy, without a transfer of such shares into his name. Shares
standing in the name of a trustee may be voted by him, either in person or by
proxy, but no trustee shall be entitled to vote shares held by him without a
transfer of such shares into his name. Shares standing in the name of a
receiver may be voted by such receiver, and shares held by or under the control
of a receiver may be voted by such receiver without the transfer thereof into
his name if authority to do so is contained in an appropriate order of the
court or other public authority by which such receiver was appointed. A
stockholder whose shares are pledged shall be entitled to vote such shares
until the shares have been transferred into the name of the pledgee, and
thereafter the pledgee shall be entitled to vote the shares so transferred.
2.14 Proposals. At an annual meeting of the stockholders, only such
business shall be conducted as shall have been properly brought before the
meeting. To be properly brought before an annual meeting, business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the Board of Directors, or (b) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought
before an annual meeting by a stockholder, the stockholder must have given
timely notice thereof in writing to the Secretary of the Corporation. To be
timely a stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the Corporation not later than 120 days
prior to the anniversary date of the mailing of proxy materials by the
Corporation in connection with the immediately preceding annual meeting of
stockholders of the Corporation or, in the case of the first annual meeting of
stockholders of the Corporation following its acquisition of all of the
outstanding capital stock of Staten Island Savings Bank, Staten Island, New
York (the "Bank"), which is expected to be held in April 1998, notice by the
stockholder must be so delivered and received no later than the close of
business on Friday, January 2, 1998, notwithstanding a determination by the
Corporation to schedule such first annual meeting later than April 1998. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (a) a description of
the business desired to be brought before the annual meeting, (b) the name and
address, as they appear on the Corporation's books, of the stockholder
proposing such business, (c) the class and
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number of shares of Corporation stock which are Beneficially Owned (as defined
in Article 12.A(e) of the Corporation's Certificate of Incorporation) by the
stockholder submitting the notice, by any Person who is Acting in Concert with
or who is an Affiliate or Associate of such stockholder (as such capitalized
terms are defined in Article 12.A of the Corporation's Certificate of
Incorporation), by any Person who is a member of any group with such
stockholder with respect to the Corporation stock or who is known by such
stockholder to be supporting such proposal on the date the notice is given to
the Corporation, and by each Person who is in control of, is controlled by or
is under common control with any of the foregoing Persons (if any of the
foregoing Persons is a partnership, corporation, limited liability company,
association or trust, information shall be provided regarding the name and
address of, and the class and number of shares of Corporation stock which are
Beneficially Owned by, each partner in such partnership, each director,
executive officer and stockholder in such corporation, each member in such
limited liability company or association, and each trustee and beneficiary of
such trust, and in each case each Person controlling such entity and each
partner, director, executive officer, stockholder, member or trustee of any
entity which is ultimately in control of such partnership, corporation, limited
liability company, association or trust), (d) the identification of any person
retained or to be compensated by the stockholder submitting the proposal, or
any person acting on his or her behalf, to make solicitations or
recommendations to stockholders for the purpose of assisting in the passage of
such proposal and a brief description of the terms of such employment, retainer
or arrangement for compensation, and (e) any material interest of the
stockholder in such business. The chairman of an annual meeting shall, if the
facts warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
Article II, Section 2.14, and if he should so determine, he shall so declare to
the meeting and any such business not properly brought before the meeting shall
not be transacted. This provision is not a limitation on any other applicable
laws and regulations.
2.15 Inspectors. For each meeting of stockholders, the Board of
Directors shall appoint one or more inspectors of election, who shall make a
written report of such meeting. If for any meeting the inspector(s) appointed
by the Board of Directors shall be unable to act or the Board of Directors
shall fail to appoint any inspector, one or more inspectors shall be appointed
at the meeting by the chairman thereof. Each inspector, before entering upon
the discharge of his duties, shall take and sign an oath faithfully to execute
the duties of inspector with strict impartiality and according to the best of
his ability. An inspector or inspectors shall (i) ascertain the number of
shares outstanding and the voting power of each, (ii) determine the shares
represented at a meeting and the validity of proxies and ballots, (iii) count
all votes and ballots, (iv) determine and retain for a reasonable period a
record of the disposition of any challenges made to any determination by the
inspectors and (v) certify their determination of the number of shares
represented at the meeting and their count of all votes and ballots. The date
and time of the opening and the closing of the polls for each matter upon which
the stockholders will vote at a meeting shall be announced at the meeting by
the chairman thereof. An inspector or inspectors shall not accept a ballot,
proxy or vote, nor any revocations thereof or changes
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thereto, after the closing of the polls (unless the Court of Chancery of the
State of Delaware upon application by a stockholder shall determine otherwise)
and may appoint or retain other persons or entities to assist them in the
performance of their duties. Inspectors need not be stockholders and may not
be nominees for election as directors.
ARTICLE III. CAPITAL STOCK
3.1 Certificates. Certificates of stock shall be issued in numerical
order, and each stockholder shall be entitled to a certificate signed by the
Chairman of the Board or the President, and the Secretary or the Treasurer, and
may be sealed with the seal of the Corporation or facsimile thereof. The
signatures of such officers may be facsimiles if the certificate is manually
signed on behalf of a transfer agent, or registered by a registrar, other than
the Corporation itself or an employee of the Corporation. If an officer who
has signed or whose facsimile signature has been placed upon such certificate
ceases to be an officer before the certificate is issued, it may be issued by
the Corporation with the same effect as if the person were an officer on the
date of issue. Each certificate of stock shall state:
(a) that the Corporation is organized under the laws of the State of
Delaware;
(b) the name of the person to whom issued;
(c) the number and class of shares and the designation of the series,
if any, which such certificate represents; and
(d) the par value of each share represented by such certificate, or a
statement that such shares are without par value.
3.2 Transfers.
(a) Transfers of stock shall be made only upon the stock transfer
books of the Corporation, kept at the registered office of the Corporation or
at its principal place of business, or at the office of its transfer agent or
registrar, and before a new certificate is issued the old certificate shall be
surrendered for cancellation. The Board of Directors may, by resolution, open
a share register in any state of the United States, and may employ an agent or
agents to keep such register, and to record transfers of shares therein.
(b) Shares of stock shall be transferred by delivery of the
certificates therefor, accompanied either by an assignment in writing on the
back of the certificate or an assignment separate from the certificate, or by a
written power of attorney to sell, assign and transfer the same, signed by the
holder of said certificate. No shares of stock shall be transferred on the
books of the Corporation until the outstanding certificates therefor have been
surrendered to the Corporation.
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(c) A written restriction on the transfer or registration of transfer
of a certificate evidencing stock of the Corporation, if permitted by the GCL
and noted conspicuously on such certificate, may be enforced against the holder
of the restricted certificate or any successor or transferee of the holder,
including an executor, administrator, trustee, guardian or other fiduciary
entrusted with like responsibility for the person or estate of the holder.
3.3 Registered Owner. Registered stockholders shall be treated by
the Corporation as the holders in fact of the stock standing in their
respective names and the Corporation shall not be bound to recognize any
equitable or other claim to or interest in any share on the part of any other
person, whether or not it shall have express or other notice thereof, except as
expressly provided by the laws of the State of Delaware.
3.4 Lost, Stolen or Destroyed Certificates. The Corporation may
issue a new certificate of stock in place of any certificate previously issued
by it which is alleged to have been lost, stolen or destroyed, and the
Corporation may require the owner of the lost, stolen or destroyed certificate,
or his legal representative, to give the Corporation a bond sufficient to
indemnify it against any claim that may be made against it on account of the
alleged loss, theft or destruction of any such certificate or the issuance of
such new certificate.
3.5 Fractional Shares or Scrip. The Corporation may (a) issue
fractions of a share which shall entitle the holder to exercise voting rights,
to receive dividends thereon and to participate in any of the assets of the
Corporation in the event of liquidation; (b) arrange for the disposition of
fractional interests by those entitled thereto; (c) pay in cash the fair value
of fractions of a share as of the time when those entitled to receive such
shares are determined; or (d) issue scrip in registered or bearer form which
shall entitle the holder to receive a certificate for a full share upon the
surrender of such scrip aggregating a full share.
3.6 Shares of Another Corporation. Shares owned by the Corporation
in another corporation, domestic or foreign, may be voted by such officer,
agent or proxy as the Board of Directors may determine or, in the absence of
such determination, by the President of the Corporation.
ARTICLE IV. BOARD OF DIRECTORS
4.1 Powers. The business and affairs of the Corporation shall be
managed by or under the direction of a Board of Directors, which may exercise
all such authority and powers of the Corporation and do all such lawful acts
and things as are not by law, the Certificate of Incorporation or these Bylaws
directed or required to be exercised or done by the stockholders.
4.2 Classification, Term and Qualifications. The Board of Directors
shall be divided into three classes as provided in Article 7.A. of the
Corporation's Certificate of
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Incorporation. No person shall be eligible for election, reelection,
appointment or reappointment to the Board of Directors if such person is 75
years of age or older; provided, however, that any person serving as a director
of the Corporation as of the effective date of the mutual-to-stock conversion
of Staten Island Savings Bank shall be eligible for reelection to one
additional three-year term subsequent to his 75th birthday.
4.3 Number of Directors. The initial Board of Directors shall
consist of 10 persons. The number of directors may at any time be increased or
decreased by a vote of a majority of the Board of Directors, provided that no
decrease shall have the effect of shortening the term of any incumbent
director. Notwithstanding anything to the contrary contained within these
Bylaws, the number of directors may not be less than five nor more than 20.
4.4 Vacancies. All vacancies in the Board of Directors shall be
filled in the manner provided in the Corporation's Certificate of
Incorporation.
4.5 Removal of Directors. Directors may be removed in the manner
provided in the Corporation's Certificate of Incorporation.
4.6 Regular Meetings. Regular meetings of the Board of Directors or
any committee thereof may be held without notice at the principal place of
business of the Corporation or at such other place or places, either within or
without the State of Delaware, as the Board of Directors or such committee, as
the case may be, may from time to time designate. Unless otherwise determined
by the Board of Directors, the annual meeting of the Board of Directors shall
be held without notice immediately after the adjournment of the annual meeting
of stockholders. Notice of such meetings shall be provided to directors in
accordance with the provisions of the GCL.
4.7 Special Meetings.
(a) Special meetings of the Board of Directors may be called at any
time by the Chairman of the Board, the President or by a majority of the
authorized number of directors, to be held at the principal place of business
of the Corporation or at such other place or places as the Board of Directors
or the person or persons calling such meeting may from time to time designate.
Notice of all special meetings of the Board of Directors shall be given to each
director at least twenty-four (24) hours prior to such meeting if notice is
given in person or by telephone, telegraph, telex, facsimile or other
electronic transmission and at least five (5) days prior to such meeting if
notice is given in writing and delivered by courier or by postage prepaid mail.
Such notice need not specify the business to be transacted at, nor the purpose
of, the meeting. Any director may waive notice of any meeting by submitting a
signed waiver of notice with the Secretary, whether before or after the
meeting. The attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a meeting for the
express purpose of objecting at the beginning of the meeting to the transaction
of any business because the meeting is not lawfully called or convened.
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(b) Special meetings of any committee of the Board of Directors may
be called at any time by such person or persons and with such notice as shall
be specified for such committee by the Board of Directors, or in the absence of
such specification, in the manner and with the notice required for special
meetings of the Board of Directors.
4.8 Waiver of Notice. Attendance of a director at a meeting shall
constitute a waiver of notice of such meeting, except where a director attends
for the express purpose of objecting to the transaction of any business because
the meeting is not lawfully called or convened. A waiver of notice signed by
the director or directors, whether before or after the time stated for the
meeting, shall be equivalent to the giving of notice.
4.9 Quorum; Actions of the Board of Directors. Except as may be
otherwise specifically provided by law, the Certificate of Incorporation or
these Bylaws, at all meetings of the Board of Directors, a majority of the
entire Board of Directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors. If a
quorum shall not be present at any meeting of the Board of Directors, the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.
4.10 Action by Directors Without a Meeting. Any action required or
which may be taken at a meeting of the directors, or of a committee thereof,
may be taken without a meeting if a consent in writing, setting forth the
action so taken or to be taken, shall be signed by all of the directors, or all
of the members of the committee, as the case may be, and such consents are
filed with the minutes of proceedings of the Board of Directors or committee,
as the case may be. Such consent shall have the same effect as a unanimous
vote.
4.11 Action by Directors by Communications Equipment. Any action
required or which may be taken at a meeting of directors, or of a committee
thereof, may be taken by means of a conference telephone or similar
communications equipment subject to any applicable provisions of the GCL.
4.12 Registering Dissent. A director who is present at a meeting of
the Board of Directors at which action on a corporate matter is taken shall be
presumed to have assented to such action unless his dissent shall be entered in
the minutes of the meeting, or unless he shall file his written dissent to such
action with the person acting as the secretary of the meeting, before the
adjournment thereof, or shall forward such dissent by registered mail to the
Secretary of the Corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to a director who voted in favor of such
action.
4.13 Executive and Other Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board, designate one or more
committees which in each case consist of one or more directors of the
Corporation, and may from time to time invest
9
<PAGE> 10
such committees with such powers as it may see fit, subject to such conditions
as may be prescribed by the Board. An Executive Committee may be appointed by
resolution passed by a majority of the full Board of Directors. It shall have
and exercise all of the authority of the Board of Directors, except in
reference to amending the Certificate of Incorporation, adopting an agreement
of merger or consolidation or plan of voluntary liquidation, recommending to
the stockholders the sale, lease or exchange or other disposition of all or
substantially all the property and assets of the Corporation, declaring a
dividend on the Corporation's capital stock or amending these Bylaws. The
designation of any such committee, and the delegation of authority thereto,
shall not relieve the Board of Directors, or any member thereof, of any
responsibility imposed by law.
4.14 Remuneration. The directors may be paid their expenses, if any,
of attendance at each meeting of the Board of Directors and may be paid a fixed
sum for attendance at each meeting of the Board of Directors, a stated salary
as director and/or such other compensation as may be fixed by the Board of
Directors. Members of special or standing committees may be allowed like
compensation for serving on committees of the Board of Directors. No such
payments shall preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
4.15 Nominations of Directors. Subject to the rights of holders of any
class or series of stock having a preference over the common stock as to
dividends or upon liquidation, nominations for the election of directors may be
made by the Board of Directors or committee appointed by the Board of Directors
or by any stockholder entitled to vote generally in an election of directors.
However, any stockholder entitled to vote generally in an election of directors
may nominate one or more persons for election as directors at a meeting only if
written notice of such stockholder's intent to make such nomination or
nominations has been given, either by personal delivery or by United States
mail, postage prepaid to the Secretary of the Corporation, which notice is
delivered to or received by the Secretary not later than (i) 120 days prior to
the anniversary date of the mailing of proxy materials by the Corporation in
connection with the immediately preceding annual meeting of stockholders of the
Corporation or, in the case of the first annual meeting of stockholders of the
Corporation following its acquisition of all of the outstanding capital stock
of the Bank, which is expected to be held in April 1998, any such nomination by
a stockholder must be so delivered or received no later than the close of
business on Friday, January 2, 1998, notwithstanding a determination by the
Corporation to schedule such first Annual Meeting later than April 1998, and
(ii) with respect to an election to be held at a special meeting of
stockholders for the election of directors, the close of business on the tenth
day following the date on which notice of such meeting is first given to
stockholders. Each such notice shall set forth: (a) the name, age, business
address and residence address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (b) the principal
occupation or employment of the stockholder submitting the notice and of each
person being nominated; (c) the class and number of shares of Corporation stock
which are Beneficially Owned (as defined in Article 12.A(e) of the
Corporation's Certificate of Incorporation) by the stockholder submitting the
notice, by any
10
<PAGE> 11
Person who is Acting in Concert with or who is an Affiliate or Associate of
such stockholder (as such capitalized terms are defined in Article 12.A of the
Corporation's Certificate of Incorporation), by any Person who is a member of
any group with such stockholder with respect to the Corporation stock or who is
known by such stockholder to be supporting such nominee(s) on the date the
notice is given to the Corporation, by each person being nominated, and by each
Person who is in control of, is controlled by or is under common control with
any of the foregoing Persons (if any of the foregoing Persons is a partnership,
corporation, limited liability company, association or trust, information shall
be provided regarding the name and address of, and the class and number of
shares of Corporation stock which are Beneficially Owned by, each partner in
such partnership, each director, executive officer and stockholder in such
corporation, each member in such limited liability company or association, and
each trustee and beneficiary of such trust, and in each case each Person
controlling such entity and each partner, director, executive officer,
stockholder, member or trustee of any entity which is ultimately in control of
such partnership, corporation, limited liability company, association or
trust); (d) a representation that the stockholder is a holder of record of
stock of the Corporation entitled to vote at such meeting and intends to appear
in person or by proxy at the meeting to nominate the person or persons
specified in the notice; (e) a description of all arrangements or
understandings between the stockholder and each nominee and any arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nomination or
nominations are to be made by the stockholder; (f) such other information
regarding the stockholder submitting the notice and each nominee proposed by
such stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission; and (g)
the consent of each nominee to serve as a director of the Corporation if so
elected. The presiding officer of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedures.
ARTICLE V. OFFICERS
5.1 Designations. The officers of the Corporation shall be a
Chairman of the Board, a President, a Secretary and a Treasurer appointed by
the Board of Directors, as well as such Executive Vice Presidents, Vice
Presidents, Assistant Vice Presidents, Assistant Secretaries, Assistant
Treasurers and such other officers as the Board of Directors or the Chairman of
the Board and President may designate. Officers of the Corporation shall be
elected for one year by the directors at their first meeting after the annual
meeting of stockholders, and officers of the Corporation shall hold office
until their successors are elected and qualified. Any two or more offices may
be held by the same person, except the offices of President and Secretary.
5.2 Powers and Duties. The officers of the Corporation shall have
such authority and perform such duties as the Board of Directors or, in the
case of officers with a title of
11
<PAGE> 12
Vice President or lower, the Chairman of the Board and President, may from time
to time authorize or determine. In the absence of action by the Board of
Directors or the Chairman of the Board and President, as applicable, the
officers shall have such powers and duties as generally pertain to their
respective offices.
5.3 Delegation. In the case of absence or inability to act of any
officer of the Corporation and of any person herein authorized to act in his
place, the Board of Directors may from time to time delegate the powers or
duties of such officer to any other officer or any director or other person
whom it may select.
5.4 Vacancies. Vacancies in any office arising from any cause may be
filled by the Board of Directors at any regular or special meeting of the
Board.
5.5 Term - Removal. The officers of the Corporation shall hold
office until their successors are chosen and qualified. Any officer or agent
elected or appointed by the Board of Directors or by the Chairman and the
President may be removed at any time, with or without cause, by the affirmative
vote of a majority of the whole Board of Directors, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
5.6 Bonds. The Board of Directors may, by resolution, require any
and all of the officers to give bonds to the Corporation, with sufficient
surety or sureties, conditions for the faithful performance of the duties of
their respective offices, and to comply with such other conditions as may from
time to time be required by the Board of Directors.
ARTICLE VI. INDEMNIFICATION, ETC. OF DIRECTORS,
OFFICERS AND EMPLOYEES
6.1 Indemnification. The Corporation shall provide indemnification
to its directors, officers, employees, agents and former directors, officers,
employees and agents and to others in accordance with the Corporation's
Certificate of Incorporation.
6.2 Advancement of Expenses. Reasonable expenses (including
attorneys' fees) incurred by a director, officer or employee of the Corporation
in defending any civil, criminal, administrative or investigative action, suit
or proceeding described in Section 6.1 may be paid by the Corporation in
advance of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors only upon receipt of an undertaking by or
on behalf of such person to repay such amount if it shall ultimately be
determined that the person is not entitled to be indemnified by the
Corporation.
6.3 Other Rights and Remedies. The indemnification and advancement
of expenses provided by, or granted pursuant to, this Article VI shall not be
deemed exclusive of any
12
<PAGE> 13
other rights to which those seeking indemnification or advancement of expenses
may be entitled under the Corporation's Certificate of Incorporation, any
agreement, vote of stockholders or disinterested directors or otherwise, both
as to actions in their official capacity and as to actions in another capacity
while holding such office, and shall continue as to a person who has ceased to
be a director, officer or employee and shall inure to the benefit of the heirs,
executors and administrators of such person.
6.4 Insurance. Upon resolution passed by the Board of Directors, the
Corporation may purchase and maintain insurance on behalf of any person who is
or was a director, officer of employee of the Corporation, or is or was serving
at the request of the corporation as a director, officer or employee of another
corporation, partnership, joint venture, trust or other enterprise, against any
liability asserted against him or incurred by him in any such capacity or
arising out of his status as such, whether or not the Corporation would have
the power to indemnify him against such liability under the provisions of its
Certificate of Incorporation or this Article VI.
6.5 Modification. The duties of the Corporation to indemnify and to
advance expenses to a director, officer or employee provided in this Article VI
shall be in the nature of a contract between the Corporation and each such
person, and no amendment or repeal of any provision of this Article VI shall
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.
ARTICLE VII. DIVIDENDS; FINANCE; AND FISCAL YEAR
7.1 Dividends. Subject to the applicable provisions of the General
Corporation Law of the State of Delaware, dividends upon the capital stock of
the Corporation may be declared by the Board of Directors at any regular or
special meeting, and may be paid in cash, in property or in shares of the
capital stock of the Corporation. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends such sum
or sums as the Board of Directors from time to time, in its absolute
discretion, may deem proper as a reserve or reserves to meet contingencies, or
for dividends, or for repairing or maintaining any property of the Corporation,
or for any other proper purpose, and the Board of Directors may modify or
abolish any such reserve.
7.2 Disbursements. All checks or demand for money and notes of the
Corporation shall be signed by such officer or officers or such other person or
persons as the Board of Directors may from time to time designate.
7.3 Depositories. The monies of the Corporation shall be deposited
in the name of the Corporation in such bank or banks or trust company or trust
companies as the Board of Directors shall designate, and shall be drawn out
only by check or other order for
13
<PAGE> 14
payment of money signed by such persons and in such manner as may be determined
by resolution of the Board of Directors.
7.4 Fiscal Year. The fiscal year of the Corporation shall end on the
31st day of December of each year.
ARTICLE VIII. NOTICES
Except as may otherwise be required by law, any notice to any
stockholder or director may be delivered personally or by mail. If mailed, the
notice shall be deemed to have been delivered when deposited in the United
States mail, addressed to the addressee at his last known address in the
records of the Corporation, with postage thereon prepaid.
ARTICLE IX. SEAL
The corporate seal of the Corporation shall be in such form and bear
such inscription as may be adopted by resolution of the Board of Directors, or
by usage of the officers on behalf of the Corporation.
ARTICLE X. BOOKS AND RECORDS
The Corporation shall keep correct and complete books and records of
account and shall keep minutes of meetings and proceedings of its stockholders
and Board of Directors (including committees thereof); and it shall keep at its
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its stockholders, giving the names and
addresses of all stockholders and the number and class of the shares held by
each. Any books, records and minutes may be in written form or any other form
capable of being converted into written form within a reasonable time.
ARTICLE XI. AMENDMENTS
11.1 Amendments. These Bylaws may be altered, amended or repealed
only as set forth in the Corporation's Certificate of Incorporation, which
provisions are incorporated herein with the same effect as if they were set
forth herein.
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<PAGE> 15
11.2 Emergency Bylaws. The Board of Directors may adopt emergency
Bylaws, subject to repeal or change by action of the stockholders, which shall
be operative during any national or local emergency.
ARTICLE XII. USE OF PRONOUNS
Use of the masculine gender in these Bylaws shall be considered to
represent either masculine or feminine gender whenever appropriate.
15
<PAGE> 1
Exhibit 4.0
(FORM OF STOCK CERTIFICATE - FRONT SIDE)
NUMBER SHARES
COMMON STOCK CUSIP
See reverse for
certain definitions
STATEN ISLAND BANCORP, INC.
INCORPORATED UNDER THE LAWS OF DELAWARE
This certifies that ___________________________________ is the
registered holder of _________________ fully paid and non-assessable shares of
the Common Stock, par value $.01 per share, of Staten Island Bancorp, Inc.,
Staten Island, New York (the "Corporation"), incorporated under the laws of the
State of Delaware.
The shares evidenced by this Certificate are transferable only on the
books of the Corporation by the holder hereof, in person or by a duly
authorized attorney or legal representative, upon surrender of this Certificate
properly endorsed. This Certificate and the shares represented hereby are
subject to all the provisions of the Certificate of Incorporation and Bylaws of
the Corporation and any and all amendments thereto. THE SHARES REPRESENTED BY
THIS CERTIFICATE ARE NOT DEPOSITS OR ACCOUNTS AND ARE NOT FEDERALLY INSURED OR
GUARANTEED. This Certificate is not valid unless countersigned by the Transfer
Agent and registered by the Registrar.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
executed by the facsimile signatures of its duly authorized officers and has
caused its facsimile seal to be affixed hereto.
Dated:
(SEAL)
- ---------------------------- -------------------------------------
Patricia J. Villani James R. Coyle
Corporate Secretary President and Chief Operating Officer
<PAGE> 2
(FORM OF STOCK CERTIFICATE - BACK SIDE)
The Corporation is authorized to issue more than one class of stock,
including a class of preferred stock which may be issued in one or more series.
The Corporation will furnish to any stockholder, upon written request and
without charge, a full statement of the designations, preferences, limitations
and relative rights of the shares of each class authorized to be issued and,
with respect to the issuance of any preferred stock to be issued in series, the
relative rights, preferences and limitations between the shares of each series
so far as the rights, preferences and limitations have been fixed and
determined and the authority of the Board of Directors to fix and determine the
relative rights, preferences and limitations of subsequent series.
The Certificate of Incorporation of the Corporation includes a
provision which generally prohibits any person (including an individual,
company or group acting in concert) from directly or indirectly offering to
acquire or acquiring the beneficial ownership of more than 10% of any class of
equity securities of the Corporation. In the event that stock is acquired in
violation of this 10% limitation, the excess shares will no longer be counted
in determining the total number of outstanding shares for purposes of any
matter involving stockholder action and the Board of Directors of the
Corporation may cause such excess shares to be transferred to an independent
trustee for sale in the open market or otherwise, with the expenses of such
sale to be paid out of the proceeds of the sale.
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not
as tenants in common
UNIF GIFT MIN ACT - Custodian under
------------------------ -------------------
(Cust) (Minor)
Uniform Gifts to Minors Act
-------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
<PAGE> 3
For value received, _____________________________________ hereby sell,
assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
TAXPAYER IDENTIFYING NUMBER OF ASSIGNEE
- ---------------------------------------------
- ---------------------------------------------
- -------------------------------------------------------------------------------
(Please print or typewrite name and address including postal zip code of
assignee)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
________________________ shares of Common Stock represented by this
Certificate, and do hereby irrevocably constitute and appoint _________________
as Attorney, to transfer the said shares on the books of the within named
Corporation, with full power of substitution.
Dated ,
-------------- --- -----
-----------------------------------
Signature
-----------------------------------
Signature
NOTICE: The signature(s) to this assignment must correspond with the name(s)
as written upon the face of this Certificate in every particular, without
alteration or enlargement, or any change whatever. The signature(s) should be
guaranteed by an eligible guarantor institution (bank, stockbroker, savings and
loan association or credit union) with membership in an approved signature
medallion program, pursuant to S.E.C. Rule 17Ad-15.
<PAGE> 1
July 25, 1997
Board of Directors
Staten Island Bancorp, Inc.
Board of Trustees
Staten Island Savings Bank
15 Beach Street
Stapleton, New York 10304-2713
Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the conversion of Staten Island Savings Bank ("Staten Island
Savings" or the "Bank"), a federally-chartered savings bank, from mutual to
stock form (the "Conversion"). In the Conversion, all of Staten Island
Savings' to-be-issued capital stock will be acquired by Staten Island Bancorp,
Inc. (the "Company"), a newly-organized Delaware-chartered corporation. For the
reasons set forth below, and based on your representations in a letter dated
July 24, 1997 ("Representation Letter"), it is our opinion that the proposed
Conversion will qualify as a reorganization within the meaning of Section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended (the "Code").
Our opinion also addresses other income tax consequences which follow from this
conclusion.
This Opinion Letter, including the opinions contained herein, is
governed by, and should be interpreted in accordance with, the Legal Opinion
Accord (the "Accord") of the American Bar Association Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and herein, and this Opinion Letter
should be read in conjunction with the Accord. Our opinions herein are limited
to the Code and the regulations promulgated thereunder (the "Subject Laws"). We
express no opinion as to other federal laws and regulations or as to laws and
regulations of other jurisdictions or as to factual or legal matters other than
as set forth herein.
We have reviewed the Company's Registration Statement on Form S-1
relating to the proposed issuance of up to 42,981,250 shares of common stock,
par value $0.01 per share ("Common Stock"), subject to adjustment by the
Company in connection with the Conversion, the Prospectus contained therein,
the Certificate of Incorporation and Bylaws of the Company, the existing mutual
and proposed Federal Stock Charter of Staten Island
<PAGE> 2
Board of Directors
Staten Island Bancorp, Inc.
Board of Trustees
Staten Island Savings Bank
July 25, 1997
Page 2
Savings, the Plan of Conversion of Staten Island Savings, Staten Island
Savings' Application for Conversion and such other corporate records and
documents as we have deemed relevant and necessary for the purposes of this
opinion. In our examination of documents, we have assumed the authenticity of
those documents submitted to us as certified, conformed or reproduced copies.
As to matters of fact which are material to this opinion, we have relied upon
the accuracy of the factual matters set forth in the Company's Registration
Statement on Form S-1 and Staten Island Savings' Plan of Conversion.
FACTS
Staten Island Savings is a federally-chartered mutual savings bank
which conducts business from its main office and branch offices located in
Staten Island and Brooklyn, New York. At April 30, 1997, Staten Island Savings
had total assets of approximately $1.8 billion, deposits of approximately $1.6
billion and net worth of approximately $177.3 million. Staten Island Savings
is a member of the Federal Home Loan Bank ("FHLB") System, and its deposits are
insured by the Bank Insurance Fund ("BIF"), administered by the Federal Deposit
Insurance Corporation.
As a mutual savings bank, Staten Island Savings has no capital stock.
Each depositor has both a deposit account in the institution and a pro rata
ownership interest in the net worth of the institution based on the balance in
his or her deposit account. This ownership interest is tied directly to the
depositors' deposit accounts, and the depositors ordinarily cannot realize the
value of their ownership, except in the unlikely event that Staten Island
Savings were to be liquidated. In such event, the depositors would share pro
rata in any residual net worth after other claims, including those of
depositors for the amount of their deposits, are paid.
The Company is a recently-formed Delaware corporation which will
acquire all of the to-be-outstanding capital stock of Staten Island Savings
upon consummation of the Conversion and, thereby, become a holding company.
The Company shall purchase all of the capital stock of Staten Island Savings
with a portion of the net proceeds from the Conversion.
On April 16, 1997, the Board of Trustees of Staten Island Savings
unanimously adopted a Plan of Conversion. The purpose of the Conversion is to
enable the Bank to issue and sell shares of its capital stock to the Company
and thereby enhance the equity capital base of the Bank, which will support
continuing savings growth of the Bank, possible
<PAGE> 3
Board of Directors
Staten Island Bancorp, Inc.
Board of Trustees
Staten Island Savings Bank
July 25, 1997
Page 3
acquisitions of other financial institutions and further enhance the Bank's
capabilities to serve the borrowing and other financial needs of the
communities it serves. The use of the holding company format will provide
greater organizational flexibility and possible diversification.
The Company will file a Registration Statement on Form S-1 to register
its Common Stock under the Securities Act of 1933 pursuant to which it will
offer for sale shares of its Common Stock. The Common Stock will be offered for
sale in a Subscription Offering pursuant to subscription rights which will not
be transferable and will be issued without payment therefor. The recipients
will not be entitled to receive cash or other property in lieu of such rights.
It is anticipated that any shares of Common Stock remaining unsold after the
Subscription Offering will be sold through a Community Offering and, if
necessary, a Syndicated Community Offering. All shares of Common Stock will be
sold at a uniform price based upon an independent valuation.
The Conversion will be effected only upon completion of the sale of all
shares of Common Stock of the Company to be issued pursuant to the Plan of
Conversion. The Company has no plan or intention to dispose of any shares of
the capital stock of Staten Island Savings, to cause Staten Island Savings to
be merged with any other corporation, or to liquidate Staten Island Savings.
The Conversion will not affect the business of Staten Island Savings.
Mortgage and other loans of Staten Island Savings will remain unchanged and
retain their same characteristics after the Conversion. There is no plan or
intention for Staten Island Savings to sell or otherwise dispose of any of its
assets following the Conversion, except for dispositions in the ordinary course
of business.
Each deposit account in Staten Island Savings at the time of the
consummation of the Conversion shall become, without any action by the account
holder, a deposit account in the converted Bank equivalent in withdrawable
amount, and subject to the same terms and conditions (except as to voting and
liquidation rights), as the deposit account in Staten Island Savings
immediately prior to the Conversion. In addition, at the time of the
Conversion, Staten Island Savings shall establish a liquidation account in an
amount equal to Staten Island Savings' net worth as reflected in the final
prospectus utilized in the Conversion. The liquidation account will be
maintained for the benefit of all Eligible Account Holders and Supplemental
Eligible Account Holders who maintain their deposit accounts in Staten Island
Savings after the Conversion. Each such account holder will, with respect to
each deposit account, have an inchoate interest in a portion of the liquidation
<PAGE> 4
Board of Directors
Staten Island Bancorp, Inc.
Board of Trustees
Staten Island Savings Bank
July 25, 1997
Page 4
account which is the account holder's subaccount balance. An account holder's
subaccount balance in the liquidation account will be determined at the time of
the Conversion and can never increase thereafter. It will, however, be
decreased to reflect subsequent withdrawals that reduce, as of annual closing
dates, the amount in each depositor's account below the amount in the account
at the time of the Conversion. In the event of a complete liquidation of
Staten Island Savings, each Eligible Account Holder and Supplemental Eligible
Account Holder will be entitled to receive a liquidation distribution in the
amount of the balance of his or her subaccount in the liquidation account
before any distribution may be made with respect to the capital stock of Staten
Island Savings.
LAW AND ANALYSIS
Section 368(a)(1)(F) of the Code provides that a mere change in the
identity, form or place of organization of one corporation, however effected,
is a reorganization. If a transaction qualifies as an "F"-type reorganization,
it will generally be nontaxable to the corporation and its shareholders under
related provisions of the Code.
In Rev. Rul. 80-105, 1980-1 C.B. 78, the Internal Revenue Service
considered the federal income tax consequences of the conversion of a federal
mutual savings and loan association to a state stock savings and loan
association. The ruling concluded that the conversion qualified as a mere
change in identity, form or place of organization within the meaning of Section
368(a)(1)(F). The rationale for this conclusion is not clearly expressed in
the ruling, but two factors are stressed. First, the changes at the corporate
level other than the place of organization and form of organization were
regarded as insubstantial. The converted association continued its business in
the same manner; it had the same savings accounts and loans. The converted
association continued its membership in the Federal Savings and Loan Insurance
Corporation (replaced subsequently by the SAIF) and remained subject to the
regulations of the Federal Home Loan Bank Board, which was replaced
subsequently by the Office of Thrift Supervision. Second, the ruling states
that the ownership rights of the depositors in the mutual company are "more
nominal than real." Although the ruling does not explain the significance of
this statement, subsequent administrative interpretations have indicated that
the Internal Revenue Service believes these nominal rights are preserved in the
liquidation account that is typically established for the depositors' benefit.
This approach enables the Internal Revenue Service to distinguish the tax
treatment of conversion transactions from the tax treatment of acquisitive
transactions in which mutual companies acquire stock companies. See Paulsen v.
Com'r, 469 U.S. 131 (1985); Rev. Rul. 69-6 1969-1 C.B. 104.
<PAGE> 5
Board of Directors
Staten Island Bancorp, Inc.
Board of Trustees
Staten Island Savings Bank
July 25, 1997
Page 5
The Internal Revenue Service has extended the holding of Rev. Rul.
80-105 to transactions similar to the one contemplated by Staten Island Savings
and the Company, in which a conversion from mutual to stock form occurs
simultaneously with the creation of a holding company. See e.g. private letter
rulings numbered 9140014 and 9144031. While these rulings have no precedential
value, they do indicate the current views of the Internal Revenue Service on
the issues presented. Hanover Bank v. U.S., 369 U.S. 672, 686 (1962).
In our opinion and based on your Representation Letter, the conversion
of Staten Island Savings from a federally-chartered mutual savings bank to a
federally-chartered stock savings bank, and the sale of its capital stock to
the Company, will constitute a reorganization within the meaning of Section
368(a)(1)(F) of the Code because the transaction represents a mere change in
the form of organization of a single corporation. There will be no change in
Staten Island Savings' business or operations, nor in its loans and deposits,
all of which will become loans and deposits of the converted savings bank. The
only significant difference between the assets of Staten Island Savings before
and after the Conversion will be the infusion of new capital. An infusion of
capital occurs in all conversion transactions, however, and had no effect upon
the Internal Revenue Service's analysis in Rev. Rul. 80-105. The ownership
rights of the depositors of the mutual savings bank, which have nominal value,
will be preserved through their interests in the liquidation account in the
converted savings bank. This account will be substantially the same as the
liquidation account described in Rev. Rul. 80-105.
Because the Bank's change in form from mutual to stock ownership will
constitute a reorganization under Section 368(a)(1)(F) of the Code, and neither
the Bank nor the Company will recognize any gain or loss as a result of the
Conversion pursuant to Section 361 of the Code and Rev. Rul. 80-105, it is also
our opinion that (1) no gain or loss will be recognized by the Bank or the
Company upon the purchase of the Bank's capital stock by the Company; (2) no
gain or loss will be recognized by Eligible Account Holders and Supplemental
Eligible Account Holders upon the issuance to them of deposit accounts in the
Bank in its stock form plus their interests in the liquidation account in
exchange for their deposit accounts in the Bank in its mutual form; (3) the tax
basis of the depositors' deposit accounts in the Bank immediately after the
Conversion will be the same as the basis of their deposit accounts immediately
prior to the Conversion; (4) the tax basis of each Eligible Account Holder's
and Supplemental Eligible Account Holder's interest in the liquidation account
will be zero; and (5) the tax basis to the stockholders of the Common Stock of
the Company purchased in the Conversion will be the amount paid therefor, and
the holding period for such shares will begin on the date of consummation of
the
<PAGE> 6
Board of Directors
Staten Island Bancorp, Inc.
Board of Trustees
Staten Island Savings Bank
July 25, 1997
Page 6
Conversion if purchased through the exercise of subscription rights and on the
day after the date of purchase if purchased in the Community Offering.
It is further our opinion that the Eligible Account Holders and
Supplemental Eligible Account Holders will recognize gain, if any, upon the
issuance to them of withdrawable savings accounts in Staten Island Savings
following the Conversion, interests in the liquidation account and
non-transferable subscription rights to purchase Company Common Stock in
exchange for their savings accounts and proprietary interests in Staten Island
Savings, but only to the extent of the value, if any, of the subscription
rights.
The opinions expressed above are limited to the income tax consequences
of the Conversion under the Subject Laws. Further, our opinions are based on
research of the Code, applicable Treasury Regulations, current published
administrative decisions of the Internal Revenue Service, existing judicial
decisions as of the date hereof, and your Representation Letter. No assurance
can be given that legislative, administrative or judicial decisions or
interpretations may not be forthcoming that will significantly change the
opinions set forth herein. We express no opinions other than those stated
immediately above as our opinions. We hereby consent to the filing of this
opinion as an exhibit to the Registration Statement and the Application for
Conversion.
Very truly yours,
ELIAS, MATZ, TIERNAN & HERRICK L.L.P.
By: /s/ KEVIN M. HOULIHAN
------------------------------
Kevin M. Houlihan, a Partner
<PAGE> 1
EXHIBIT 8.3
[RP FINANCIAL, LC. LETTERHEAD]
July 22, 1997
Board of Trustees
Staten Island Bancorp, Inc.
Staten Island Savings Bank
15 Beach Street
Staten Island, New York 10304
Re: Subscription Rights
Members of the Board of Trustees:
All capitalized terms not otherwise defined in this letter have the
meanings given such terms in the Plan of Conversion adopted by the Board of
Trustees of Staten Island Savings Bank ("SISB" or the "Bank") whereby the Bank
will convert from a state-chartered mutual savings bank to a federally-chartered
stock savings bank and issue all of the Bank's outstanding capital stock to
Staten Island Bancorp, Inc. (the "Holding Company"). Simultaneously, the Holding
Company will issue shares of common stock. In addition, Bancorp intends to
donate to a charitable foundation, immediately following the Conversion,
authorized but unissued shares of Bancorp Common Stock in an amount equal to 5
percent of the common stock issued in the conversion.
We understand that, in accordance with the Plan of Conversion,
Subscription Rights to purchase shares of Common Stock in the Holding Company
are to be issued to: (1) Eligible Account Holders; (2) the ESOP; (3)
Supplemental Eligible Account Holders; (4) Other Members and (5) Directors,
Officers and Employees. Based solely upon our observation that the Subscription
Rights will be available to such parties without cost, will be legally
non-transferable and of short duration, and will afford such parties the right
only to purchase shares of Common Stock at the same price as will be paid by
members of the general public in the Community Offering, but without undertaking
any independent investigation of state or federal law or the position of the
Internal Revenue Service with respect to this issue, we are of the belief that,
pursuant to our valuation of the Subscription Rights:
(1) the Subscription Rights will have no ascertainable market
value; and,
(2) the price at which the Subscription Rights are exercisable
will not be more or less than the pro forma market value of
the shares upon issuance.
<PAGE> 2
RP Financial, LC
Board of Trustees
July 22, 1997
Page 2
Changes in the local and national economy, the legislative and
regulatory environment, the stock market, interest rates, and other external
forces (such as natural disasters or significant world events) may occur from
time to time, often with great unpredictability and may materially impact the
value of thrift stocks as a whole or the Holding Company's value alone.
Accordingly, no assurance can be given that persons who subscribe to shares of
common stock in the conversion will thereafter be able to buy or sell such
shares at the same price paid in the Subscription Offering.
Respectfully submitted,
RP FINANCIAL, LC.
/s/ RP FINANCIAL, LC.
<PAGE> 1
Exhibit 10.1
AGREEMENT
EMPLOYMENT AGREEMENT, dated this ____ day of ______ 1997, between
Staten Island Bancorp, Inc., a Delaware corporation (the "Corporation"), Staten
Island Savings Bank, a federally-chartered savings bank and a wholly owned
subsidiary of the Corporation (the "Bank"), and _____________________ (the
"Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of the Corporation and
the Bank (together the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive in the event that his employment with the
Employers is terminated under specified circumstances;
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereby agree as follows:
1. DEFINITIONS. The following words and terms shall have the
meanings set forth below for the purposes of this Agreement:
(a) AVERAGE ANNUAL COMPENSATION. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the
average Base Salary and bonus paid to the Executive by the Employers or any
subsidiary thereof during the most recent five taxable years preceding the Date
of Termination (or such shorter period as the Executive was employed).
(b) BASE SALARY. "Base Salary" shall have the meaning set forth
in Section 3(a) hereof.
(c) CAUSE. Termination of the Executive's employment for "Cause"
shall mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule or
regulation (other than traffic violations or similar offenses) or final
cease-and-desist order or material breach of any provision of this Agreement.
(d) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of
the Corporation" shall mean the occurrence of any of the following: (i) the
acquisition of control of the
<PAGE> 2
Corporation as defined in 12 C.F.R. Section 574.4, unless a presumption of
control is successfully rebutted or unless the transaction is exempted by 12
C.F.R. Section 574.3(c)(vii), or any successor to such sections; (ii) an event
that would be required to be reported in response to Item 1(a) of Form 8-K or
Item 6(e) of Schedule 14A of Regulation 14A pursuant to the Securities Exchange
Act of 1934, as amended ("Exchange Act"), or any successor thereto, whether or
not any class of securities of the Corporation is registered under the Exchange
Act; (iii) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-under
the Exchange Act), directly or indirectly, of securities of the Corporation
representing 20% or more of the combined voting power of the Corporation's then
outstanding securities; or (iv) during any period of three consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors of the Corporation cease for any reason to constitute at least a
majority thereof unless the election, or the nomination for election by
stockholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.
(e) CODE. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(f) DATE OF TERMINATION. "Date of Termination" shall mean (i) if
the Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination
is given or as specified in such Notice.
(g) DISABILITY. Termination by the Employers of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits
under the applicable long-term disability plan maintained by the Employers or
any subsidiary or, if no such plan applies, which would qualify the Executive
for disability benefits under the Federal Social Security System.
(h) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following
a Change in Control of the Corporation based on:
(i) Without the Executive's express written consent,
the failure to elect or to re-elect or to appoint or
to re-appoint the Executive to the office of
_______________________ of the Employers or a
material adverse change made by the Employers in the
Executive's functions, duties or responsibilities as
_______________________ of the Employers;
(ii) Without the Executive's express written consent, a
reduction by either of the Employers in the
Executive's Base Salary as the same may be increased
from time to time or, except to the extent permitted
by Section 3(b) hereof, a reduction in the package
of fringe benefits provided to the Executive, taken
as a whole;
2
<PAGE> 3
(iii) The principal executive office of either of the
Employers is relocated outside of the Stapleton, New
York area or, without the Executive's express written
consent, either of the Employers require the Executive
to be based anywhere other than an area in which the
Employers' principal executive office is located,
except for required travel on business of the Employers
to an extent substantially consistent with the
Executive's present business travel obligations;
(iv) Any purported termination of the Executive's employment
for Cause, Disability or Retirement which is not
effected pursuant to a Notice of Termination satisfying
the requirements of paragraph (j) below; or
(v) The failure by the Employers to obtain the assumption
of and agreement to perform this Agreement by any
successor as contemplated in Section 9 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service.
(j) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Employers for any reason, including without
limitation for Cause, Disability or Retirement, or by the Executive for any
reason, including without limitation for Good Reason, shall be communicated by
written "Notice of Termination" to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated, (iii) specifies a Date of Termination, which shall be
not less than thirty (30) nor more than ninety (90) days after such Notice of
Termination is given, except in the case of the Employers' termination of the
Executive's employment for Cause; and (iv) is given in the manner specified in
Section 10 hereof.
(k) RETIREMENT. "Retirement" shall mean voluntary termination by
the Executive in accordance with the Employers' retirement policies, including
early retirement, generally applicable to the Employers' salaried employees.
3
<PAGE> 4
2. TERM OF EMPLOYMENT.
(a) The Employers hereby employ the Executive
as________________________ and the Executive hereby accepts said employment and
agrees to render such services to the Employers on the terms and conditions set
forth in this Agreement. Unless extended as provided in this Section 2, this
Agreement shall terminate three (3) years after the date first above written.
Prior to the second annual anniversary of the date first above written and each
annual anniversary thereafter, the Boards of Directors of the Employers shall
consider and review (after taking into account all relevant factors, including
the Executive's performance) a one-year extension of the term of this
Agreement, and the term shall continue to extend each year (beginning with the
second annual anniversary date) if the Boards of Directors so approve such
extension unless the Executive gives written notice to the Employers of the
Executive's election not to extend the term, with such notice to be given not
less than thirty (30) days prior to any such anniversary date. If the Boards
of Directors elect not to extend the term, they shall give written notice of
such decision to the Executive not less than thirty (30) days prior to any such
anniversary date. If any party gives timely notice that the term will not be
extended as of any such annual anniversary date, then this Agreement shall
terminate at the conclusion of its remaining term. References herein to the
term of this Agreement shall refer both to the initial term and successive
terms.
(b) During the term of this Agreement, the Executive shall
perform such executive services for the Employers as is consistent with his
title of _______________________ and from time to time assigned to him by the
Employers' Boards of Directors.
3. COMPENSATION AND BENEFITS.
(a) The Employers shall compensate and pay the Executive for his
services during the term of this Agreement at a minimum base salary of $_______
per year ("Base Salary"), which may be increased from time to time in such
amounts as may be determined by the Boards of Directors of the Employers and
may not be decreased without the Executive's express written consent. In
addition to his Base Salary, the Executive shall be entitled to receive during
the term of this Agreement such bonus payments as may be determined by the
Boards of Directors of the Employers.
(b) During the term of this Agreement, the Executive shall be
entitled to participate in and receive the benefits of any pension or other
retirement benefit plan, profit sharing, stock option, employee stock
ownership, or other plans, benefits and privileges given to employees and
executives of the Employers, to the extent commensurate with his then duties
and responsibilities, as fixed by the Boards of Directors of the Employers.
The Employers shall not make any changes in such plans, benefits or privileges
which would adversely affect the Executive's rights or benefits thereunder,
unless such change occurs pursuant to a program applicable to all executive
officers of the Employers and does not result in a proportionately greater
adverse change in the rights of or benefits to the Executive as compared with
any other executive officer of the Employers. Nothing paid to the Executive
under any plan or arrangement presently in
4
<PAGE> 5
effect or made available in the future shall be deemed to be in lieu of the
salary payable to the Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, the Executive shall be
entitled to paid annual vacation in accordance with the policies as established
from time to time by the Boards of Directors of the Employers. The Executive
shall not be entitled to receive any additional compensation from the Employers
for failure to take a vacation, nor shall the Executive be able to accumulate
unused vacation time from one year to the next, except to the extent authorized
by the Boards of Directors of the Employers.
(d) In the event the Executive's employment is terminated due to
Disability or Retirement, the Employers shall provide continued life, medical,
dental and disability coverage substantially identical to the coverage
maintained by the Employers for the Executive immediately prior to his
termination. Such coverage shall cease upon the expiration of the remaining
term of this Agreement.
(e) In the event of the Executive's death during the term of this
Agreement, the Employers shall provide to the Executive's spouse for the life
of such spouse continued medical and dental coverage substantially identical to
the coverage maintained by the Employers for the Executive immediately prior to
his death.
(f) The Executive's compensation, benefits and expenses shall be
paid by the Corporation and the Bank in the same proportion as the time and
services actually expended by the Executive on behalf of each respective
Employer.
4. EXPENSES. The Employers shall reimburse the Executive or
otherwise provide for or pay for all reasonable expenses incurred by the
Executive in furtherance of, or in connection with the business of the
Employers, including, but not by way of limitation, automobile and traveling
expenses, subject to such reasonable documentation and other limitations as may
be established by the Boards of Directors of the Employers. If such expenses
are paid in the first instance by the Executive, the Employers shall reimburse
the Executive therefor.
5. TERMINATION.
(a) The Employers shall have the right, at any time upon prior
Notice of Termination, to terminate the Executive's employment hereunder for
any reason, including without limitation termination for Cause, Disability or
Retirement, and the Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
(b) In the event that the (i) the Executive's employment is
terminated by the Employers for Cause, Disability or Retirement or in the event
of the Executive's death, or (ii) the Executive terminates his employment
hereunder other than for Good Reason, the Executive shall have no right pursuant
to this Agreement to compensation or other benefits for any period after the
applicable Date of Termination.
5
<PAGE> 6
(c) In the event that the Executive's employment is terminated as
a result of Disability, Retirement or the Executive's death during the term of
this Agreement, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination, except as provided for in Sections 3(d) and 3(e) hereof.
(d) In the event that (i) the Executive's employment is
terminated by the Employers for other than Cause, Disability, Retirement or the
Executive's death or (ii) such employment is terminated by the Executive (a)
due to a material breach of this Agreement by the Employers, which breach has
not been cured within fifteen (15) days after a written notice of
non-compliance has been given by the Executive to the Employers, or (b) for
Good Reason, then the Employers shall, subject to the provisions of Section 6
hereof, if applicable,
(A) pay to the Executive, in either twenty-four (24) equal
monthly installments beginning with the first business day of the month
following the Date of Termination or in a lump sum within five business days of
the Date of Termination (at the Executive's election), a cash severance amount
equal to two (2) times the Executive's Average Annual Compensation, and
(B) maintain and provide for a period ending at the earlier of
(i) the expiration of the remaining term of employment pursuant hereto prior to
the Notice of Termination or (ii) the date of the Executive's full-time
employment by another employer (provided that the Executive is entitled under
the terms of such employment to benefits substantially similar to those
described in this subparagraph (B), at no cost to the Executive, the
Executive's continued participation in all group insurance, life insurance,
health and accident, disability and other employee benefit plans, programs and
arrangements in which the Executive was entitled to participate immediately
prior to the Date of Termination (other than stock option and restricted stock
plans of the Employers), provided that in the event that the Executive's
participation in any plan, program or arrangement as provided in this
subparagraph (B) is barred or during such period any such plan, program or
arrangement is discontinued or the benefits thereunder are materially reduced,
the Employers shall arrange to provide the Executive with benefits
substantially similar to those which the Executive was entitled to receive
under such plans, programs and arrangements immediately prior to the Date of
Termination.
6. LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES. If the
payments and benefits pursuant to Section 5 hereof, either alone or together
with other payments and benefits which the Executive has the right to receive
from the Employers, would constitute a "parachute payment" under Section 280G of
the Code, the payments and benefits payable by the Employers pursuant to Section
5 hereof shall be reduced, in the manner determined by the Executive, by the
amount, if any, which is the minimum necessary to result in no portion of the
payments and benefits under Section 5 being non-deductible to either of the
Employers pursuant to Section 280G of the Code and subject to the excise tax
imposed under Section 4999 of the Code. The determination of any reduction in
the payments and benefits to be made pursuant to Section 5 shall be based upon
the opinion of independent tax counsel selected by the Employers and paid by the
Employers. Such counsel shall be reasonably acceptable to the Employers and the
6
<PAGE> 7
Executive; shall promptly prepare the foregoing opinion, but in no event later
than thirty (30) days from the Date of Termination; and may use such actuaries
as such counsel deems necessary or advisable for the purpose. Nothing contained
herein shall result in a reduction of any payments or benefits to which the
Executive may be entitled upon termination of employment under any circumstances
other than as specified in this Section 6, or a reduction in the payments and
benefits specified in Section 5 below zero.
7. MITIGATION; EXCLUSIVITY OF BENEFITS.
(a) The Executive shall not be required to mitigate the amount of
any benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended
to exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
8. WITHHOLDING. All payments required to be made by the
Employers hereunder to the Executive shall be subject to the withholding of
such amounts, if any, relating to tax and other payroll deductions as the
Employers may reasonably determine should be withheld pursuant to any
applicable law or regulation.
9. ASSIGNABILITY. The Employers may assign this Agreement and
their rights and obligations hereunder in whole, but not in part, to any
corporation, bank or other entity with or into which the Employers may
hereafter merge or consolidate or to which the Employers may transfer all or
substantially all of their assets, if in any such case said corporation, bank
or other entity shall by operation of law or expressly in writing assume all
obligations of the Employers hereunder as fully as if it had been originally
made a party hereto, but may not otherwise assign this Agreement or its rights
and obligations hereunder. The Executive may not assign or transfer this
Agreement or any rights or obligations hereunder.
7
<PAGE> 8
10. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by certified
or registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Employers: Board of Directors
Staten Island Bancorp, Inc.
15 Beach Street
Stapleton, New York 10304-2713
To the Executive: [EXECUTIVE'S NAME AND ADDRESS]
11. AMENDMENT; WAIVER. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer or officers
as may be specifically designated by the Boards of Directors of the Employers
to sign on their behalf. No waiver by any party hereto at any time of any
breach by any other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time.
12. GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the United
States where applicable and otherwise by the substantive laws of the State of
New York.
13. NATURE OF OBLIGATIONS. Nothing contained herein shall create
or require the Employers to create a trust of any kind to fund any benefits
which may be payable hereunder, and to the extent that the Executive acquires a
right to receive benefits from the Employers hereunder, such right shall be no
greater than the right of any unsecured general creditor of the Employers.
14. HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. REGULATORY ACTIONS. The following provisions shall be
applicable to the parties to the extent that they are required to be included
in employment agreements between a savings
8
<PAGE> 9
association and its employees pursuant to Section 563.39(b) of the Regulations
Applicable to All Savings Associations, 12 C.F.R. Section 563.39(b), or any
successor thereto, and shall be controlling in the event of a conflict with any
other provision of this Agreement, including without limitation Section 5
hereof.
(a) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employers' affairs pursuant
to notice served under Section 8(e)(3) or Section 8(g)(1) of the Federal
Deposit Insurance Act ("FDIA") (12 U.S.C. Sections 1818(e)(3) and 1818(g)(1)),
the Employers' obligations under this Agreement shall be suspended as of the
date of service, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Employers may, in their discretion: (i) pay the
Executive all or part of the compensation withheld while its obligations under
this Agreement were suspended, and (ii) reinstate (in whole or in part) any of
its obligations which were suspended.
(b) If the Executive is removed from office and/or permanently
prohibited from participating in the conduct of the Employers' affairs by an
order issued under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C.
Sections 1818(e)(4) and (g)(1)), all obligations of the Employers under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the Executive and the Employers as of the date of termination shall
not be affected.
(c) If the Bank is in default, as defined in Section 3(x)(1) of
the FDIA (12 U.S.C. Section 1813(x)(1)), all obligations under this Agreement
shall terminate as of the date of default, but vested rights of the Executive
and the Employers as of the date of termination shall not be affected.
(d) All obligations under this Agreement shall be terminated
pursuant to 12 C.F.R. Section 563.39(b)(5) (except to the extent that it is
determined that continuation of the Agreement for the continued operation of
the Employers is necessary): (i) by the Director of the Office of Thrift
Supervision ("OTS"), or his/her designee, at the time the Federal Deposit
Insurance Corporation ("FDIC") enters into an agreement to provide assistance
to or on behalf of the Bank under the authority contained in Section 13(c) of
the FDIA (12 U.S.C. Section 1823(c)); or (ii) by the Director of the OTS, or
his/her designee, at the time the Director or his/her designee approves a
supervisory merger to resolve problems related to operation of the Bank or when
the Bank is determined by the Director of the OTS to be in an unsafe or unsound
condition, but vested rights of the Executive and the Employers as of the date
of termination shall not be affected.
18. REGULATORY PROHIBITION. Notwithstanding any other provision
of this Agreement to the contrary, any payments made to the Executive pursuant
to this Agreement, or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the FDIA (12 U.S.C. Section 1828(k)) and the
regulations promulgated thereunder, including 12 C.F.R. Part 359.
19. PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF
BENEFITS. In the event any dispute or controversy arising under or in
connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive
9
<PAGE> 10
shall be entitled to the payment of (a) all legal fees incurred by the Executive
in resolving such dispute or controversy, and (2) any back-pay, including Base
Salary, bonuses and any other cash compensation, fringe benefits and any
compensation and benefits due to the Executive under this Agreement.
20. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement between the Employers and the Executive with respect to the matters
agreed to herein. All prior agreements between the Employers and the Executive
with respect to the matters agreed to herein are hereby superseded and shall
have no force or effect.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: STATEN ISLAND BANCORP, INC.
By:
- -------------------------- ---------------------------------
Attest: STATEN ISLAND SAVINGS BANK
By:
- -------------------------- ---------------------------------
EXECUTIVE
By:
---------------------------------
[EXECUTIVE]
10
<PAGE> 1
Exhibit 10.2
AGREEMENT
AGREEMENT, dated this ____ day of _____ 1997, between Staten Island
Bancorp, Inc. (the "Corporation"), a Delaware corporation, and ________________
(the "Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of the Corporation and
Staten Island Savings Bank (the "Bank") (together, the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers;
WHEREAS, the Corporation and the Bank desire to enter into separate
agreements with the Executive with respect to his employment by each of the
Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive by the Corporation in the event that his
employment with the Corporation is terminated under specified circumstances;
NOW THEREFORE, in consideration of the mutual agreements herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. DEFINITIONS. The following words and terms shall have the
meanings set forth below for the purposes of this Agreement:
(a) AVERAGE ANNUAL COMPENSATION. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the
average level of compensation paid to the Executive by the Employers or any
subsidiary thereof during the most recent five taxable years preceding the Date
of Termination and which was either (i) included in the Executive's gross
income for tax purposes, including but not limited to Base Salary, bonuses and
amounts taxable to the Executive under any qualified or non-qualified employee
benefit plans of the Employers, or (ii) deferred at the election of the
Executive.
(b) BASE SALARY. "Base Salary" shall have the meaning set forth
in Section 3(a) hereof.
(c) CAUSE. Termination of the Executive's employment for "Cause"
shall mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful
<PAGE> 2
2
violation of any law, rule or regulation (other than traffic violations or
similar offenses) or final cease-and-desist order or material breach of any
provision of this Agreement.
(d) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of
the Corporation" shall mean the occurrence of any of the following: (i) the
acquisition of control of the Corporation as defined in 12 C.F.R. Section
574.4, unless a presumption of control is successfully rebutted or unless the
transaction is exempted by 12 C.F.R. Section 574.3(c)(vii), or any successor to
such sections; (ii) an event that would be required to be reported in response
to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of Regulation 14A
pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act"),
or any successor thereto, whether or not any class of securities of the
Corporation is registered under the Exchange Act; (iii) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding securities; or (iv)
during any period of three consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Corporation cease for
any reason to constitute at least a majority thereof unless the election, or
the nomination for election by stockholders, of each new director was approved
by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(e) CODE. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(f) DATE OF TERMINATION. "Date of Termination" shall mean (i) if
the Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination
is given or as specified in such Notice.
(g) DISABILITY. Termination by the Corporation of the
Executive's employment based on "Disability" shall mean termination because of
any physical or mental impairment which qualifies the Executive for disability
benefits under the applicable long-term disability plan maintained by the
Employers or any subsidiary or, if no such plan applies, which would qualify
the Executive for disability benefits under the Federal Social Security System.
(h) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following
a Change in Control of the Corporation based on:
(i) Without the Executive's express written consent, the
failure to elect or to re-elect or to appoint or to
re-appoint the Executive to the office of
_______________________ of the Employers or a
material adverse change made by the Employers in the
Executive's functions, duties or responsibilities as
_______________________ of the Employers;
<PAGE> 3
3
(ii) Without the Executive's express written consent, a
reduction by either of the Employers in the
Executive's Base Salary as the same may be increased
from time to time or, except to the extent permitted
by Section 3(b) hereof, a reduction in the package
of fringe benefits provided to the Executive, taken
as a whole;
(iii) The principal executive office of either of the
Employers is relocated outside of the Stapleton, New
York area or, without the Executive's express
written consent, either of the Employers require the
Executive to be based anywhere other than an area in
which the Employers' principal executive office is
located, except for required travel on business of
the Employers to an extent substantially consistent
with the Executive's present business travel
obligations;
(iv) Any purported termination of the Executive's
employment for Cause, Disability or Retirement which
is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph (j) below;
or
(v) The failure by the Corporation to obtain the
assumption of and agreement to perform this
Agreement by any successor as contemplated in
Section 9 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service.
(j) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Corporation for any reason, including without
limitation for Cause, Disability or Retirement, or by the Executive for any
reason, including without limitation for Good Reason, shall be communicated by
written "Notice of Termination" to the other party hereto. For purposes of
this Agreement, a "Notice of Termination" shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated, (iii) specifies a Date of Termination, which shall be
not less than thirty (30) nor more than ninety (90) days after such Notice of
Termination is given, except in the case of the Corporation's termination of
the Executive's employment for Cause, which shall be effective immediately; and
(iv) is given in the manner specified in Section 10 hereof.
(k) RETIREMENT. "Retirement" shall mean voluntary termination by
the Executive in accordance with the Employers' retirement policies, including
early retirement, generally applicable to their salaried employees.
<PAGE> 4
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2. TERM OF EMPLOYMENT.
(a) The Corporation hereby employs the Executive as
_______________________ and the Executive hereby accepts said employment and
agrees to render such services to the Corporation on the terms and conditions
set forth in this Agreement. The term of employment under this Agreement shall
be for three years, commencing on the date of this Agreement and, upon approval
of the Board of Directors of the Corporation, shall extend for an additional
year on each annual anniversary of the date of this Agreement such that at any
time the remaining term of this Agreement shall be from two to three years.
Prior to the first annual anniversary of the date of this Agreement and each
annual anniversary thereafter, the Board of Directors of the Corporation shall
consider and review (after taking into account all relevant factors, including
the Executive's performance hereunder) an extension of the term of this
Agreement, and the term shall continue to extend each year if the Board of
Directors approves such extension unless the Executive gives written notice to
the Employers of the Executive's election not to extend the term, with such
written notice to be given not less than thirty (30) days prior to any such
anniversary date. If the Board of Directors elects not to extend the term, it
shall give written notice of such decision to the Executive not less than
thirty (30) days prior to any such anniversary date. If any party gives timely
notice that the term will not be extended as of any annual anniversary date,
then this Agreement shall terminate at the conclusion of its remaining term.
References herein to the term of this Agreement shall refer both to the initial
term and successive terms.
(b) During the term of this Agreement, the Executive shall
perform such executive services for the Corporation as may be consistent with
his titles and from time to time assigned to him by the Corporation's Board of
Directors.
3. COMPENSATION AND BENEFITS.
(a) The Employers shall compensate and pay the Executive for his
services during the term of this Agreement at a minimum base salary of $_______
per year ("Base Salary"), which may be increased from time to time in such
amounts as may be determined by the Boards of Directors of the Employers and
may not be decreased without the Executive's express written consent. In
addition to his Base Salary, the Executive shall be entitled to receive during
the term of this Agreement such bonus payments as may be determined by the
Boards of Directors of the Employers.
(b) During the term of this Agreement, the Executive shall be
entitled to participate in and receive the benefits of any pension or other
retirement benefit plan, profit sharing, stock option, employee stock
ownership, or other plans, benefits and privileges given to employees and
executives of the Employers, to the extent commensurate with his then duties
and responsibilities, as fixed by the Boards of Directors of the Employers.
The Corporation shall not make any changes in such plans, benefits or
privileges which would adversely affect the Executive's rights or benefits
thereunder, unless such change occurs pursuant to a program applicable to all
executive officers of the Corporation and does not
<PAGE> 5
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result in a proportionately greater adverse change in the rights of or benefits
to the Executive as compared with any other executive officer of the
Corporation. Nothing paid to the Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the salary payable to the Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, the Executive shall be
entitled to paid annual vacation in accordance with the policies as established
from time to time by the Boards of Directors of the Employers. The Executive
shall not be entitled to receive any additional compensation from the Employers
for failure to take a vacation, nor shall the Executive be able to accumulate
unused vacation time from one year to the next, except to the extent authorized
by the Boards of Directors of the Employers.
(d) In the event the Executive's employment is terminated due to
Disability or Retirement, the Employers shall provide continued life, medical,
dental and disability coverage substantially identical to the coverage
maintained by the Employers for the Executive immediately prior to his
termination. Such coverage shall cease upon the expiration of the remaining
term of this Agreement.
(e) In the event of the Executive's death during the term of this
Agreement, the Employers shall provide to the Executive's spouse for the life
of such spouse continued medical and dental coverage substantially identical to
the coverage maintained by the Employers for the Executive immediately prior to
his death.
(f) The Executive's compensation, benefits and expenses shall be
paid by the Corporation and the Bank in the same proportion as the time and
services actually expended by the Executive on behalf of each respective
Employer.
4. EXPENSES. The Employers shall reimburse the Executive or
otherwise provide for or pay for all reasonable expenses incurred by the
Executive in furtherance of or in connection with the business of the
Employers, including, but not by way of limitation, automobile expenses and
other traveling expenses, and all reasonable entertainment expenses (whether
incurred at the Executive's residence, while traveling or otherwise), subject
to such reasonable documentation and other limitations as may be established by
the Boards of Directors of the Employers. If such expenses are paid in the
first instance by the Executive, the Employers shall reimburse the Executive
therefor.
5. TERMINATION.
(a) The Corporation shall have the right, at any time upon prior
Notice of Termination, to terminate the Executive's employment hereunder for
any reason, including without limitation termination for Cause, Disability or
Retirement, and the Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
<PAGE> 6
6
(b) In the event that (i) the Executive's employment is
terminated by the Corporation for Cause or (ii) the Executive terminates his
employment hereunder other than for Disability, Retirement, death or Good
Reason, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination.
(c) In the event that the Executive's employment is terminated as
a result of Disability, Retirement or the Executive's death during the term of
this Agreement, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination, except as provided for in Sections 3(d) and 3(e) hereof.
(d) In the event that (i) the Executive's employment is
terminated by the Corporation for other than Cause, Disability, Retirement or
the Executive's death or (ii) such employment is terminated by the Executive
(a) due to a material breach of this Agreement by the Corporation, which breach
has not been cured within fifteen (15) days after a written notice of
non-compliance has been given by the Executive to the Employers, or (b) for
Good Reason, then the Corporation shall
(A) pay to the Executive, in either thirty-six (36)
equal monthly installments beginning with the first business day of
the month following the Date of Termination or in a lump sum within
five business days of the Date of Termination (at the Executive's
election), a cash severance amount equal to three (3) times that
portion of the Executive's Average Annual Compensation paid by the
Corporation, and
(B) maintain and provide for a period ending at the
earlier of (i) the expiration of the remaining term of employment
pursuant hereto prior to the Notice of Termination or (ii) the date of
the Executive's full-time employment by another employer (provided
that the Executive is entitled under the terms of such employment to
benefits substantially similar to those described in this subparagraph
(B)), at no cost to the Executive, the Executive's continued
participation in all group insurance, life insurance, health and
accident insurance, disability insurance and other employee benefit
plans, programs and arrangements offered by the Corporation in which
the Executive was entitled to participate immediately prior to the
Date of Termination (excluding (x) stock option and restricted stock
plans of the Employers, (y) bonuses and other items of cash
compensation included in Average Annual Compensation, and (z) other
benefits, or portions thereof, included in Average Annual
Compensation), provided that in the event that the Executive's
participation in any plan, program or arrangement as provided in this
subparagraph (B) is barred, or during such period any such plan,
program or arrangement is discontinued or the benefits thereunder are
materially reduced, the Corporation shall arrange to provide the
Executive with benefits substantially similar to those which the
Executive was entitled to receive under such plans, programs and
arrangements immediately prior to the Date of Termination.
<PAGE> 7
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6. PAYMENT OF ADDITIONAL BENEFITS UNDER CERTAIN CIRCUMSTANCES.
(a) If the payments and benefits pursuant to Section 5 hereof,
either alone or together with other payments and benefits which the Executive
has the right to receive from the Employers (including, without limitation, the
payments and benefits which the Executive would have the right to receive from
the Bank pursuant to Section 5 of the Agreement between the Bank and the
Executive dated ________, 1997 ("Bank Agreement"), before giving effect to any
reduction in such amounts pursuant to Section 6 of the Bank Agreement), would
constitute a "parachute payment" as defined in Section 280G(b)(2) of the Code
(the "Initial Parachute Payment," which includes the amounts paid pursuant to
clause (A) below), then the Corporation shall pay to the Executive, in
thirty-six (36) equal monthly installments beginning with the first business
day of the month following the Date of Termination or in a lump sum within five
business days of the Date of Termination (at the Executive's election), a cash
amount equal to the sum of the following:
(A) the amount by which the payments and benefits that
would have otherwise been paid by the Bank to the Executive pursuant
to Section 5 of the Bank Agreement are reduced by the provisions of
Section 6 of the Bank Agreement;
(B) twenty (20) percent (or such other percentage equal
to the tax rate imposed by Section 4999 of the Code) of the amount by
which the Initial Parachute Payment exceeds the Executive's "base
amount" from the Employers, as defined in Section 280G(b)(3) of the
Code, with the difference between the Initial Parachute Payment and
the Executive's base amount being hereinafter referred to as the
"Initial Excess Parachute Payment";
(C) such additional amount (tax allowance) as may be
necessary to compensate the Executive for the payment by the Executive
of state and federal income and excise taxes on the payment provided
under clause (B) above and on any payments under this clause (C). In
computing such tax allowance, the payment to be made under clause (B)
above shall be multiplied by the "gross up percentage" ("GUP"). The
GUP shall be determined as follows:
Tax Rate
GUP = -----------
1- Tax Rate
The Tax Rate for purposes of computing the GUP shall be the highest
marginal federal and state income and employment-related tax rate,
including any applicable excise tax rate, applicable to the Executive
in the year in which the payment under clause (B) above is made.
(b) Notwithstanding the foregoing, if it shall subsequently be
determined in a final judicial determination or a final administrative
settlement to which the Executive is a party
<PAGE> 8
8
that the actual excess parachute payment as defined in Section 280G(b)(1) of
the Code is different from the Initial Excess Parachute Payment (such different
amount being hereafter referred to as the "Determinative Excess Parachute
Payment"), then the Corporation's independent tax counsel or accountants shall
determine the amount (the "Adjustment Amount") which either the Executive must
pay to the Corporation or the Corporation must pay to the Executive in order to
put the Executive (or the Corporation, as the case may be) in the same position
the Executive (or the Corporation, as the case may be) would have been if the
Initial Excess Parachute Payment had been equal to the Determinative Excess
Parachute Payment. In determining the Adjustment Amount, the independent tax
counsel or accountants shall take into account any and all taxes (including any
penalties and interest) paid by or for the Executive or refunded to the
Executive or for the Executive's benefit. As soon as practicable after the
Adjustment Amount has been so determined, the Corporation shall pay the
Adjustment Amount to the Executive or the Executive shall repay the Adjustment
Amount to the Corporation, as the case may be.
(c) In each calendar year that the Executive receives payments of
benefits under this Section 6, the Executive shall report on his state and
federal income tax returns such information as is consistent with the
determination made by the independent tax counsel or accountants of the
Corporation as described above. The Corporation shall indemnify and hold the
Executive harmless from any and all losses, costs and expenses (including
without limitation, reasonable attorneys' fees, interest, fines and penalties)
which the Executive incurs as a result of so reporting such information. The
Executive shall promptly notify the Corporation in writing whenever the
Executive receives notice of the institution of a judicial or administrative
proceeding, formal or informal, in which the federal tax treatment under
Section 4999 of the Code of any amount paid or payable under this Section 6 is
being reviewed or is in dispute. The Corporation shall assume control at its
expense over all legal and accounting matters pertaining to such federal tax
treatment (except to the extent necessary or appropriate for the Executive to
resolve any such proceeding with respect to any matter unrelated to amounts
paid or payable pursuant to this Section 6) and the Executive shall cooperate
fully with the Corporation in any such proceeding. The Executive shall not
enter into any compromise or settlement or otherwise prejudice any rights the
Corporation may have in connection therewith without the prior consent of the
Corporation.
7. MITIGATION; EXCLUSIVITY OF BENEFITS.
(a) The Executive shall not be required to mitigate the amount of
any benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended
to exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
<PAGE> 9
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8. WITHHOLDING. All payments required to be made by the
Corporation hereunder to the Executive shall be subject to the withholding of
such amounts, if any, relating to tax and other payroll deductions as the
Corporation may reasonably determine should be withheld pursuant to any
applicable law or regulation.
9. ASSIGNABILITY. The Corporation may assign this Agreement and
its rights and obligations hereunder in whole, but not in part, to any
corporation, bank or other entity with or into which the Corporation may
hereafter merge or consolidate or to which the Corporation may transfer all or
substantially all of its assets, if in any such case said corporation, bank or
other entity shall by operation of law or expressly in writing assume all
obligations of the Corporation hereunder as fully as if it had been originally
made a party hereto, but may not otherwise assign this Agreement or its rights
and obligations hereunder. The Executive may not assign or transfer this
Agreement or any rights or obligations hereunder.
10. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by certified
or registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Corporation: Secretary
Staten Island Bancorp, Inc.
15 Beach Street
Stapleton, New York 10304-2713
To the Bank: Secretary
Staten Island Savings Bank
15 Beach Street
Stapleton, New York 10304-2713
To the Executive: [EXECUTIVE'S NAME AND ADDRESS]
11. AMENDMENT; WAIVER. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer or officers
as may be specifically designated by the Board of Directors of the Corporation
to sign on its behalf. No waiver by any party hereto at any time of any breach
by any other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
<PAGE> 10
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12. GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the United
States where applicable and otherwise by the substantive laws of the State of
New York.
13. NATURE OF OBLIGATIONS. Nothing contained herein shall create
or require the Corporation to create a trust of any kind to fund any benefits
which may be payable hereunder, and to the extent that the Executive acquires a
right to receive benefits from the Corporation hereunder, such right shall be
no greater than the right of any unsecured general creditor of the Corporation.
14. HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. REGULATORY PROHIBITION. Notwithstanding any other provision
of this Agreement to the contrary, any payments made to the Executive pursuant
to this Agreement, or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C.
Section 1828(k)) and the regulations promulgated thereunder, including 12
C.F.R. Part 359.
18. PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF
BENEFITS. In the event any dispute or controversy arising under or in
connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of (a) all legal fees incurred by the Executive in
resolving such dispute or controversy, and (2) any back-pay, including Base
Salary, bonuses and any other cash compensation, fringe benefits and any
compensation and benefits due to the Executive under this Agreement.
19. INDEMNIFICATION. The Corporation shall provide the Executive
(including his heirs, executors and administrators) with coverage under a
standard directors' and officers' liability insurance policy at its expense, or
in lieu thereof, shall indemnify the Executive (and his heirs, executors and
administrators) to the fullest extent permitted under Delaware law against all
expenses and liabilities reasonably incurred by him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of his having been a director or officer of the Corporation (whether or
not he continues to be a director or officer at the time of incurring such
expenses or liabilities). Such expenses and liabilities
<PAGE> 11
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shall include, but shall not be limited to, judgments, court costs and
attorneys' fees and the cost of reasonable settlements.
20. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement between the Corporation and the Executive with respect to the matters
agreed to herein. All prior agreements between the Corporation and the
Executive with respect to the matters agreed to herein are hereby superseded
and shall have no force or effect. Notwithstanding the foregoing, nothing
contained in this Agreement shall affect the agreement of even date being
entered into between the Bank and the Executive.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: STATEN ISLAND BANCORP, INC.
By:
- ------------------------- --------------------------------
---------------------, Director
EXECUTIVE
By:
-------------------------------
--------------------
<PAGE> 1
Exhibit 10.3
AGREEMENT
AGREEMENT, dated this ____ day of _____ 1997, between Staten Island
Savings Bank (the "Bank"), a federally chartered savings bank, and
________________ (the "Executive").
WITNESSETH
WHEREAS, the Executive is presently an officer of Staten Island
Bancorp, Inc. (the "Corporation") and the Bank (together, the "Employers");
WHEREAS, the Employers desire to be ensured of the Executive's
continued active participation in the business of the Employers;
WHEREAS, the Corporation and the Bank desire to enter into separate
agreements with the Executive with respect to his employment by each of the
Employers; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Employers and in consideration of the Executive's agreeing to remain in the
employ of the Employers, the parties desire to specify the severance benefits
which shall be due the Executive by the Bank in the event that his employment
with the Bank is terminated under specified circumstances;
NOW THEREFORE, in consideration of the mutual agreements herein
contained, and upon the other terms and conditions hereinafter provided, the
parties hereby agree as follows:
1. DEFINITIONS. The following words and terms shall have the
meanings set forth below for the purposes of this Agreement:
(a) AVERAGE ANNUAL COMPENSATION. The Executive's "Average Annual
Compensation" for purposes of this Agreement shall be deemed to mean the
average level of compensation paid to the Executive by the Employers or any
subsidiary thereof during the most recent five taxable years preceding the Date
of Termination and which was either (i) included in the Executive's gross
income for tax purposes, including but not limited to Base Salary, bonuses and
amounts taxable to the Executive under any qualified or non-qualified employee
benefit plans of the Employers, or (ii) deferred at the election of the
Executive.
(b) BASE SALARY. "Base Salary" shall have the meaning set forth
in Section 3(a) hereof.
(c) CAUSE. Termination of the Executive's employment for "Cause"
shall mean termination because of personal dishonesty, incompetence, willful
misconduct, breach of
<PAGE> 2
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fiduciary duty involving personal profit, intentional failure to perform stated
duties, willful violation of any law, rule or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order or material
breach of any provision of this Agreement.
(d) CHANGE IN CONTROL OF THE CORPORATION. "Change in Control of
the Corporation" shall mean the occurrence of any of the following: (i) the
acquisition of control of the Corporation as defined in 12 C.F.R. Section
574.4, unless a presumption of control is successfully rebutted or unless the
transaction is exempted by 12 C.F.R. Section 574.3(c)(vii), or any successor to
such sections; (ii) an event that would be required to be reported in response
to Item 1(a) of Form 8-K or Item 6(e) of Schedule 14A of Regulation 14A
pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act"),
or any successor thereto, whether or not any class of securities of the
Corporation is registered under the Exchange Act; (iii) any "person" (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Corporation representing 20% or more of the
combined voting power of the Corporation's then outstanding securities; or (iv)
during any period of three consecutive years, individuals who at the beginning
of such period constitute the Board of Directors of the Corporation cease for
any reason to constitute at least a majority thereof unless the election, or
the nomination for election by stockholders, of each new director was approved
by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.
(e) CODE. "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(f) DATE OF TERMINATION. "Date of Termination" shall mean (i) if
the Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination
is given or as specified in such Notice.
(g) DISABILITY. Termination by the Bank of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits
under the applicable long-term disability plan maintained by the Employers or
any subsidiary or, if no such plan applies, which would qualify the Executive
for disability benefits under the Federal Social Security System.
(h) GOOD REASON. Termination by the Executive of the Executive's
employment for "Good Reason" shall mean termination by the Executive following
a Change in Control of the Corporation based on:
(i) Without the Executive's express written consent, the
failure to elect or to re-elect or to appoint or to
re-appoint the Executive to the office of
_______________________ of the Employers or a
material adverse change made by the Employers in the
Executive's functions, duties or responsibilities as
_______________________ of the Employers;
<PAGE> 3
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(ii) Without the Executive's express written consent, a
reduction by either of the Employers in the
Executive's Base Salary as the same may be increased
from time to time or, except to the extent permitted
by Section 3(b) hereof, a reduction in the package
of fringe benefits provided to the Executive, taken
as a whole;
(iii) The principal executive office of either of the
Employers is relocated outside of the Stapleton, New
York area or, without the Executive's express
written consent, either of the Employers require the
Executive to be based anywhere other than an area in
which the Employers' principal executive office is
located, except for required travel on business of
the Employers to an extent substantially consistent
with the Executive's present business travel
obligations;
(iv) Any purported termination of the Executive's
employment for Cause, Disability or Retirement which
is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph (j) below;
or
(v) The failure by the Bank to obtain the assumption of
and agreement to perform this Agreement by any
successor as contemplated in Section 9 hereof.
(i) IRS. IRS shall mean the Internal Revenue Service.
(j) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Bank for any reason, including without limitation
for Cause, Disability or Retirement, or by the Executive for any reason,
including without limitation for Good Reason, shall be communicated by written
"Notice of Termination" to the other party hereto. For purposes of this
Agreement, a "Notice of Termination" shall mean a dated notice which (i)
indicates the specific termination provision in this Agreement relied upon,
(ii) sets forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision
so indicated, (iii) specifies a Date of Termination, which shall be not less
than thirty (30) nor more than ninety (90) days after such Notice of
Termination is given, except in the case of the Bank's termination of
Executive's employment for Cause, which shall be effective immediately; and
(iv) is given in the manner specified in Section 10 hereof.
(k) RETIREMENT. "Retirement" shall mean voluntary termination by
the Executive in accordance with the Employers' retirement policies, including
early retirement, generally applicable to their salaried employees.
<PAGE> 4
4
2. TERM OF EMPLOYMENT.
(a) The Bank hereby employs the Executive as
____________________________ and the Executive hereby accepts said employment
and agrees to render such services to the Bank on the terms and conditions set
forth in this Agreement. The term of employment under this Agreement shall be
for three years, commencing on the date of this Agreement and, upon approval of
the Board of Directors of the Bank, shall extend for an additional year on each
annual anniversary of the date of this Agreement such that at any time the
remaining term of this Agreement shall be from two to three years. Prior to the
first annual anniversary of the date of this Agreement and each annual
anniversary thereafter, the Board of Directors of the Bank shall consider and
review (after taking into account all relevant factors, including the
Executive's performance hereunder) an extension of the term of this Agreement,
and the term shall continue to extend each year if the Board of Directors
approves such extension unless the Executive gives written notice to the
Employers of the Executive's election not to extend the term, with such written
notice to be given not less than thirty (30) days prior to any such anniversary
date. If the Board of Directors elects not to extend the term, it shall give
written notice of such decision to the Executive not less than thirty (30) days
prior to any such anniversary date. If any party gives timely notice that the
term will not be extended as of any annual anniversary date, then this
Agreement shall terminate at the conclusion of its remaining term. References
herein to the term of this Agreement shall refer both to the initial term and
successive terms.
(b) During the term of this Agreement, the Executive shall
perform such executive services for the Bank as may be consistent with his
titles and from time to time assigned to him by the Bank's Board of Directors.
3. COMPENSATION AND BENEFITS.
(a) The Employers shall compensate and pay the Executive for his
services during the term of this Agreement at a minimum base salary of $_______
per year ("Base Salary"), which may be increased from time to time in such
amounts as may be determined by the Boards of Directors of the Employers and
may not be decreased without the Executive's express written consent. In
addition to his Base Salary, the Executive shall be entitled to receive during
the term of this Agreement such bonus payments as may be determined by the
Boards of Directors of the Employers.
(b) During the term of this Agreement, the Executive shall be
entitled to participate in and receive the benefits of any pension or other
retirement benefit plan, profit sharing, stock option, employee stock
ownership, or other plans, benefits and privileges given to employees and
executives of the Employers, to the extent commensurate with his then duties
and responsibilities, as fixed by the Boards of Directors of the Employers.
The Bank shall not make any changes in such plans, benefits or privileges which
would adversely affect the Executive's rights or benefits thereunder, unless
such change occurs pursuant to a program applicable to all executive officers
of the Bank and does not result in a
<PAGE> 5
5
proportionately greater adverse change in the rights of or benefits to the
Executive as compared with any other executive officer of the Bank. Nothing
paid to the Executive under any plan or arrangement presently in effect or made
available in the future shall be deemed to be in lieu of the salary payable to
the Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, the Executive shall be
entitled to paid annual vacation in accordance with the policies as established
from time to time by the Boards of Directors of the Employers. The Executive
shall not be entitled to receive any additional compensation from the Employers
for failure to take a vacation, nor shall the Executive be able to accumulate
unused vacation time from one year to the next, except to the extent authorized
by the Boards of Directors of the Employers.
(d) In the event the Executive's employment is terminated due to
Disability or Retirement, the Employers shall provide continued life, medical,
dental and disability coverage substantially identical to the coverage
maintained by the Employers for the Executive immediately prior to his
termination. Such coverage shall cease upon the expiration of the remaining
term of this Agreement.
(e) In the event of the Executive's death during the term of this
Agreement, the Employers shall provide to the Executive's spouse for the life
of such spouse continued medical and dental coverage substantially identical to
the coverage maintained by the Employers for the Executive immediately prior to
his death.
(f) The Executive's compensation, benefits and expenses shall be
paid by the Corporation and the Bank in the same proportion as the time and
services actually expended by the Executive on behalf of each respective
Employer.
4. EXPENSES. The Employers shall reimburse the Executive or
otherwise provide for or pay for all reasonable expenses incurred by the
Executive in furtherance of or in connection with the business of the
Employers, including, but not by way of limitation, automobile expenses and
other traveling expenses, and all reasonable entertainment expenses (whether
incurred at the Executive's residence, while traveling or otherwise), subject
to such reasonable documentation and other limitations as may be established by
the Boards of Directors of the Employers. If such expenses are paid in the
first instance by the Executive, the Employers shall reimburse the Executive
therefor.
5. TERMINATION.
(a) The Bank shall have the right, at any time upon prior Notice
of Termination, to terminate the Executive's employment hereunder for any
reason, including without limitation termination for Cause, Disability or
Retirement, and the Executive shall have the right, upon prior Notice of
Termination, to terminate his employment hereunder for any reason.
<PAGE> 6
6
(b) In the event that (i) the Executive's employment is
terminated by the Bank for Cause or (ii) the Executive terminates his
employment hereunder other than for Disability, Retirement, death or Good
Reason, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination.
(c) In the event that the Executive's employment is terminated as
a result of Disability, Retirement or the Executive's death during the term of
this Agreement, the Executive shall have no right pursuant to this Agreement to
compensation or other benefits for any period after the applicable Date of
Termination, except as provided for in Sections 3(d) and 3(e) hereof.
(d) In the event that (i) the Executive's employment is
terminated by the Bank for other than Cause, Disability, Retirement or the
Executive's death or (ii) such employment is terminated by the Executive (a)
due to a material breach of this Agreement by the Bank, which breach has not
been cured within fifteen (15) days after a written notice of non-compliance
has been given by the Executive to the Employers, or (b) for Good Reason, then
the Bank shall, subject to the provisions of Section 6 hereof, if applicable
(A) pay to the Executive, in either thirty-six (36)
equal monthly installments beginning with the first business day of
the month following the Date of Termination or in a lump sum within
five business days of the Date of Termination (at the Executive's
election), a cash severance amount equal to three (3) times that
portion of the Executive's Average Annual Compensation paid by the
Bank, and
(B) maintain and provide for a period ending at the
earlier of (i) the expiration of the remaining term of employment
pursuant hereto prior to the Notice of Termination or (ii) the date of
the Executive's full-time employment by another employer (provided
that the Executive is entitled under the terms of such employment to
benefits substantially similar to those described in this subparagraph
(B)), at no cost to the Executive, the Executive's continued
participation in all group insurance, life insurance, health and
accident insurance, disability insurance and other employee benefit
plans, programs and arrangements offered by the Bank in which the
Executive was entitled to participate immediately prior to the Date of
Termination (excluding (x) stock option and restricted stock plans of
the Employers, (y) bonuses and other items of cash compensation
included in Average Annual Compensation and (z) other benefits, or
portions thereof, included in Average Annual Compensation), provided
that in the event that the Executive's participation in any plan,
program or arrangement as provided in this subparagraph (B) is barred,
or during such period any such plan, program or arrangement is
discontinued or the benefits thereunder are materially reduced, the
Bank shall arrange to provide the Executive with benefits
substantially similar to those which the Executive was entitled to
receive under such plans, programs and arrangements immediately prior
to the Date of Termination.
<PAGE> 7
7
6. LIMITATION OF BENEFITS UNDER CERTAIN CIRCUMSTANCES. If the
payments and benefits pursuant to Section 5 hereof, either alone or together
with other payments and benefits which the Executive has the right to receive
from the Bank, would constitute a "parachute payment" under Section 280G of the
Code, the payments and benefits payable by the Bank pursuant to Section 5
hereof shall be reduced, in the manner determined by the Executive, by the
amount, if any, which is the minimum necessary to result in no portion of the
payments and benefits payable by the Bank under Section 5 being non-deductible
to the Bank pursuant to Section 280G of the Code and subject to the excise tax
imposed under Section 4999 of the Code. The parties hereto agree that the
present value of the payments and benefits payable pursuant to this Agreement
to the Executive upon termination shall be limited to three times the
Executive's Average Annual Compensation. The determination of any reduction in
the payments and benefits to be made pursuant to Section 5 shall be based upon
the opinion of independent counsel selected by the Bank's independent public
accountants and paid by the Bank. Such counsel shall be reasonably acceptable
to the Bank and the Executive; shall promptly prepare the foregoing opinion,
but in no event later than thirty (30) days from the Date of Termination; and
may use such actuaries as such counsel deems necessary or advisable for the
purpose. Nothing contained herein shall result in a reduction of any payments
or benefits to which the Executive may be entitled upon termination of
employment under any circumstances other than as specified in this Section 6,
or a reduction in the payments and benefits specified in Section 5 below zero.
7. MITIGATION; EXCLUSIVITY OF BENEFITS.
(a) The Executive shall not be required to mitigate the amount of
any benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended
to exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employers pursuant to employee benefit plans
of the Employers or otherwise.
8. WITHHOLDING. All payments required to be made by the Bank
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Bank may reasonably
determine should be withheld pursuant to any applicable law or regulation.
9. ASSIGNABILITY. The Bank may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation,
bank or other entity with or into which the Bank may hereafter merge or
consolidate or to which the Bank may transfer all or substantially all of its
assets, if in any such case said corporation, bank or other entity shall by
operation of law or expressly in writing assume all obligations of the Bank
hereunder as fully as if it had been originally made a party hereto, but may
not
<PAGE> 8
8
otherwise assign this Agreement or its rights and obligations hereunder. The
Executive may not assign or transfer this Agreement or any rights or
obligations hereunder.
10. NOTICE. For the purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by certified
or registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
To the Bank: Secretary
Staten Island Savings Bank
15 Beach Street
Stapleton, New York 10304-2713
To the Corporation: Secretary
Staten Island Bancorp, Inc.
15 Beach Street
Stapleton, New York 10304-2713
To the Executive: [EXECUTIVE'S NAME AND ADDRESS]
11. AMENDMENT; WAIVER. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by the Executive and such officer or officers
as may be specifically designated by the Board of Directors of the Bank to sign
on its behalf. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
12. GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the United
States where applicable and otherwise by the substantive laws of the State of
New York.
13. NATURE OF OBLIGATIONS. Nothing contained herein shall create
or require the Bank to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Executive acquires a right
to receive benefits from the Bank hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Bank.
14. HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
<PAGE> 9
9
15. VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
16. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
17. REGULATORY ACTIONS. The following provisions shall be
applicable to the parties to the extent that they are required to be included
in employment agreements between a savings association and its employees
pursuant to Section 563.39(b) of the Regulations Applicable to All Savings
Associations, 12 C.F.R. Section 563.39(b), or any successor thereto, and shall
be controlling in the event of a conflict with any other provision of this
Agreement, including without limitation Section 5 hereof.
(a) If the Executive is suspended from office and/or temporarily
prohibited from participating in the conduct of the Employers' affairs pursuant
to notice served under Section 8(e)(3) or Section 8(g)(1) of the Federal
Deposit Insurance Act ("FDIA") (12 U.S.C. Sections 1818(e)(3) and 1818(g)(1)),
the Employers' obligations under this Agreement shall be suspended as of the
date of service, unless stayed by appropriate proceedings. If the charges in
the notice are dismissed, the Employers may, in their discretion: (i) pay the
Executive all or part of the compensation withheld while its obligations under
this Agreement were suspended, and (ii) reinstate (in whole or in part) any of
its obligations which were suspended.
(b) If the Executive is removed from office and/or permanently
prohibited from participating in the conduct of the Employers' affairs by an
order issued under Section 8(e)(4) or Section 8(g)(1) of the FDIA (12 U.S.C.
Sections 1818(e)(4) and (g)(1)), all obligations of the Employers under this
Agreement shall terminate as of the effective date of the order, but vested
rights of the Executive and the Employers as of the date of termination shall
not be affected.
(c) If the Bank is in default, as defined in Section 3(x)(1) of
the FDIA (12 U.S.C. Section 1813(x)(1)), all obligations under this Agreement
shall terminate as of the date of default, but vested rights of the Executive
and the Employers as of the date of termination shall not be affected.
(d) All obligations under this Agreement shall be terminated
pursuant to 12 C.F.R. Section 563.39(b)(5) (except to the extent that it is
determined that continuation of the Agreement for the continued operation of
the Employers is necessary): (i) by the Director of the Office of Thrift
Supervision ("OTS"), or his/her designee, at the time the Federal Deposit
Insurance Corporation ("FDIC") enters into an agreement to provide assistance
to or on behalf of the Bank under the authority contained in Section 13(c) of
the FDIA (12 U.S.C. Section 1823(c)); or (ii) by the Director of the OTS, or
his/her designee, at the time the
<PAGE> 10
10
Director or his/her designee approves a supervisory merger to resolve problems
related to operation of the Bank or when the Bank is determined by the Director
of the OTS to be in an unsafe or unsound condition, but vested rights of the
Executive and the Employers as of the date of termination shall not be
affected.
18. REGULATORY PROHIBITION. Notwithstanding any other provision
of this Agreement to the contrary, any payments made to the Executive pursuant
to this Agreement, or otherwise, are subject to and conditioned upon their
compliance with Section 18(k) of the Federal Deposit Insurance Act (12 U.S.C.
Section 1828(k)) and the regulations promulgated thereunder, including 12
C.F.R. Part 359.
19. PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF
BENEFITS. In the event any dispute or controversy arising under or in
connection with the Executive's termination is resolved in favor of the
Executive, whether by judgment, arbitration or settlement, the Executive shall
be entitled to the payment of (a) all legal fees incurred by the Executive in
resolving such dispute or controversy, and (2) any back-pay, including Base
Salary, bonuses and any other cash compensation, fringe benefits and any
compensation and benefits due to the Executive under this Agreement.
20. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement between the Bank and the Executive with respect to the matters agreed
to herein. All prior agreements between the Bank and the Executive with
respect to the matters agreed to herein are hereby superseded and shall have no
force or effect. Notwithstanding the foregoing, nothing contained in this
Agreement shall affect the agreement of even date being entered into between
the Corporation and the Executive.
<PAGE> 11
11
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
Attest: STATEN ISLAND SAVINGS BANK
By:
- ------------------------- --------------------------------
---------------------, Director
EXECUTIVE
By:
-------------------------------
--------------------
<PAGE> 1
LETTERHEAD OF ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
(and to all references to our Firm) included in or made part of this Prospectus
which is included in the Application for Conversion of Staten Island Savings
Bank on Form AC, the Holding Company Application for Staten Island Bancorp,
Inc. on Form H-(e)I-S and the Registration Statement on Form S-1 of Staten
Island Bancorp, Inc.
ARTHUR ANDERSEN LLP
New York, NY
July 25, 1997
<PAGE> 1
EXHIBIT 23.3
[RP FINANCIAL, LC. LETTERHEAD]
July 22, 1997
Board of Trustees
Staten Island Bancorp, Inc.
Staten Island Savings Bank
15 Beach Street
Staten Island, New York 10304
Gentlemen:
We hereby consent to the use of our firm's name in the Application for
Conversion of Staten Island Savings Bank, Staten Island, New York and any
amendments thereto, in the Form S-1 Registration Statement and any amendments
thereto and in the Form H(e)1 for Staten Island Bancorp, Inc. We also hereby
consent to the inclusion of, summary of and references to our Appraisal Report
and our statement concerning subscription rights in such filings including the
Prospectus of Staten Island Bancorp, Inc.
Sincerely,
RP FINANCIAL, LC.
/s/ RONALD S. RIGGINS
Ronald S. Riggins
President
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 43,522
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 9,100
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 703,134
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 977,992
<ALLOWANCE> (9,977)
<TOTAL-ASSETS> 1,782,323
<DEPOSITS> 1,577,748
<SHORT-TERM> 10
<LIABILITIES-OTHER> 33,441
<LONG-TERM> 44
0
0
<COMMON> 0
<OTHER-SE> 171,080
<TOTAL-LIABILITIES-AND-EQUITY> 1,782,323
<INTEREST-LOAN> 73,744
<INTEREST-INVEST> 49,083
<INTEREST-OTHER> 1,603
<INTEREST-TOTAL> 124,430
<INTEREST-DEPOSIT> 50,431
<INTEREST-EXPENSE> 50,437
<INTEREST-INCOME-NET> 73,993
<LOAN-LOSSES> (1,000)
<SECURITIES-GAINS> (2,710)
<EXPENSE-OTHER> 40,066
<INCOME-PRETAX> 36,856
<INCOME-PRE-EXTRAORDINARY> 21,775
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,775
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.46
<LOANS-NON> 22,750
<LOANS-PAST> 1
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 10,704
<CHARGE-OFFS> 2,695
<RECOVERIES> 968
<ALLOWANCE-CLOSE> 9,977
<ALLOWANCE-DOMESTIC> 9,977
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> APR-30-1997
<CASH> 39,594
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 74,150
<TRADING-ASSETS> 14,406
<INVESTMENTS-HELD-FOR-SALE> 677,486
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 991,188
<ALLOWANCE> (14,687)
<TOTAL-ASSETS> 1,848,295
<DEPOSITS> 1,606,793
<SHORT-TERM> 15,000
<LIABILITIES-OTHER> 34,164
<LONG-TERM> 15,043
0
0
<COMMON> 0
<OTHER-SE> 177,295
<TOTAL-LIABILITIES-AND-EQUITY> 1,848,295
<INTEREST-LOAN> 26,969
<INTEREST-INVEST> 15,277
<INTEREST-OTHER> 679
<INTEREST-TOTAL> 42,925
<INTEREST-DEPOSIT> 16,642
<INTEREST-EXPENSE> 16,903
<INTEREST-INCOME-NET> 26,022
<LOAN-LOSSES> (4,667)
<SECURITIES-GAINS> (508)
<EXPENSE-OTHER> 14,752
<INCOME-PRETAX> 8,467
<INCOME-PRE-EXTRAORDINARY> 6,888
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,888
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.58
<LOANS-NON> 24,415
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 9,977
<CHARGE-OFFS> 405
<RECOVERIES> 448
<ALLOWANCE-CLOSE> 14,687
<ALLOWANCE-DOMESTIC> 14,687
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE> 1
Exhibit 99.1
-----------------------------------------------
CONVERSION VALUATION APPRAISAL REPORT
STATEN ISLAND BANCORP, INC.
PROPOSED HOLDING COMPANY FOR
STATEN ISLAND SAVINGS BANK
STATEN ISLAND, NEW YORK
DATED AS OF:
JULY 17, 1997
-----------------------------------------------
PREPARED BY:
RP FINANCIAL, LC.
1700 NORTH MOORE STREET
SUITE 2210
ARLINGTON, VIRGINIA 22209
<PAGE> 2
[RP FINANCIAL, LC. LETTERHEAD]
July 17, 1997
Board of Directors
Staten Island Bancorp, Inc.
Staten Island Savings Bank
15 Beach Street
Staten Island, New York 10304
Gentlemen:
At your request, we have completed and hereby provide an independent
appraisal ("Appraisal") of the estimated pro forma market value of the common
stock which is to be issued in connection with the mutual-to-stock conversion
transaction described below.
This Appraisal is furnished pursuant to the requirements of 563b.7 and
has been prepared in accordance with the "Guidelines for Appraisal Reports for
the Valuation of Savings and Loan Associations Converting from Mutual to Stock
Form of Organization" of the Office of Thrift Supervision ("OTS"), including
the most recent revisions as of October 21, 1994, and applicable
interpretations thereof.
Description of Reorganization
The Board of Trustees of Staten Island Savings Bank ("SISB" or the
"Bank") has adopted a Plan of Conversion (the "Plan") pursuant to which the
Bank will convert from a federally chartered mutual savings bank to a federally
chartered stock savings bank and issue all of its outstanding shares to Staten
Island Bancorp, Inc. (the "Company"). The Company is a Delaware corporation
organized in July 1997 by the Bank for the purpose of becoming a unitary
holding company of the Bank. Pursuant to the Plan, the Company will offer
shares of Common Stock in the Subscription Offering, the concurrent Community
Offering and, if necessary, in a Syndicated Community Offering. The Common
Stock is first being offered in the Subscription Offering with nontransferable
subscription rights being granted to Eligible Account Holders, the ESOP,
Supplemental Eligible Account Holders, Other Members, and directors, officers
and employees of the Bank. In addition, the Company intends to donate to a
charitable foundation, immediately following the Conversion, authorized but
unissued shares of Company Common Stock in an amount equal to 5.0 percent of
the number of shares of Common Stock sold in the Offerings. All capitalized
terms not otherwise defined in this letter have the meanings given such terms
in the Plan.
<PAGE> 3
RP Financial, LC.
Board of Directors
July 17, 1997
Page 2
RP Financial, LC.
RP Financial, LC. ("RP Financial") is a financial consulting firm
serving the financial services industry nationwide that, among other things,
specializes in financial valuations and analyses of business enterprises and
securities, including the pro forma valuation for savings institutions
converting from mutual-to-stock form. The background and experience of RP
Financial is detailed in Exhibit V-1. We believe that, except for the fee we
will receive for our appraisal and assisting the Bank and the Company in the
preparation of the post-conversion business plan, we are independent of the
Bank and the Company and the other parties engaged by the Bank or the Company
to assist in the stock conversion process.
Valuation Methodology
In preparing our appraisal, we have reviewed the Bank's and the
Company's Application for Approval of Conversion, including the Proxy
Statement, as filed with the OTS, and the Holding Company's Form S-1
registration statement as filed with the Securities Exchange Commission. We
have conducted a financial analysis of the Bank that has included a review of
its audited financial information for the last five fiscal years and various
more recent unaudited information and internal financial reports and due
diligence related discussions with the Bank's management; Arthur Andersen LLP,
the Bank's independent auditor; Elias, Matz, Tiernan & Herrick, L.L.P., the
Bank's conversion counsel; and Keefe, Bruyette & Woods, Inc., the Bank's
financial and marketing advisor in connection with the Company's stock
offering. All conclusions set forth in the appraisal were reached
independently from such discussions. In addition, where appropriate, we have
considered information based on other available published sources that we
believe are reliable. While we believe the information and data gathered from
all these sources are reliable, we cannot guarantee the accuracy and
completeness of such information.
We have investigated the competitive environment within which the Bank
operates and have assessed the Bank's relative strengths and weaknesses. We
have kept abreast of the changing regulatory and legislative environment for
financial institutions and analyzed the potential impact on the Bank and the
industry as a whole. We have analyzed the potential effects of conversion on
the Bank's operating characteristics and financial performance as they relate
to the pro forma market value. We have reviewed the overall conditions in the
Bank's primary market area as set forth in demographic, economic and
competitive information prepared by CACI, SNL Securities and other third party
private and governmental sources. We have compared the Bank's financial
performance and condition with selected publicly-traded thrifts and thrift
holding companies in accordance with the Valuation Guidelines, as well as all
publicly-traded thrifts and thrift holding companies. We have reviewed the
current conditions in the securities markets in general and in the market for
thrift stocks in particular, including the market for existing thrift issues
and the market for initial public offerings by thrifts and thrift holding
companies. We have excluded from such analyses publicly-traded mutual holding
companies and thrifts subject to announced or rumored acquisition and/or other
unusual characteristics.
<PAGE> 4
RP Financial, LC.
Board of Directors
July 17, 1997
Page 3
Our Appraisal is based on the Bank's representation that the
information contained in the regulatory applications and additional information
furnished to us by the Bank and its independent auditors, legal counsel and
other authorized agents are truthful, accurate and complete. We did not
independently verify the financial statements and other information provided by
the Bank, its independent auditors, legal counsel and other authorized agents
nor did we independently value the assets or liabilities of the Bank. The
valuation considers the Bank only as a going concern and should not be
considered as an indication of the liquidation value.
Our appraised value is predicated on a continuation of the current
operating environment for the Bank and the Company and for all thrifts and
their holding companies. Changes in the local, state and national economy, the
legislative and regulatory environment for financial institutions, the stock
market, interest rates, and other external forces (such as natural disasters or
significant world events) may occur from time to time, often with great
unpredictability and may materially impact the value of thrift stocks as a
whole or the Bank's and the Company's values alone. It is our understanding
that there are no current plans for selling control of the Company or the Bank
following Conversion. To the extent that such factors can be foreseen, they
have been factored into our analysis.
The estimated pro forma market value is defined as the price at which
the Company's Common Stock, immediately upon completion of the conversion
offering, would change hands between a willing buyer and a willing seller,
neither being under any compulsion to buy or sell and both having reasonable
knowledge of relevant facts.
Valuation Conclusion
It is our opinion that, as of July 17, 1997, the aggregate pro forma
market value of the shares to be issued was $309.5 million. Based on this
valuation, the Directors of the Company and the Bank have established the
Purchase Price and the number of shares of Common Stock to be offered,
including the range of value. Accordingly, the Boards have established a range
of value of 15 percent above and below the appraised value of $309.5 million
(or "midpoint"), indicating a minimum value of $263.1 million and a maximum
value of $356.0 million. Based on the $10.00 per share offering price
determined by the Boards, this valuation range equates to an offering of
26,309,524 shares at the minimum to 35,595,238 shares at the maximum,
30,952,381 shares at the midpoint. In the event that the appraised value is
subject to an increase, up to 40,934,524 shares may be sold at an issue price
of $10.00 per share, for an aggregate market value of $409.3 million, without a
resolicitation.
Based on this valuation range, incorporating the 5.0 percent shares
issued to the Foundation following consummation of the offering, the offering
range is as follows: $276,250,000 at the minimum, $325,000,000 at the midpoint,
$373,750,000 at the maximum and $429,812,500 at the supermaximum. Based on a
$10.00 per share offering price, the number of offering shares is as follows:
27,625,000 at the minimum, 32,500,000 at the midpoint, 37,375,000 at the
maximum and 42,981,250 at the supermaximum.
<PAGE> 5
RP Financial, LC.
Board of Directors
July 17, 1997
Page 4
Limiting Factors and Considerations
Our valuation is not intended, and must not be construed, as a
recommendation of any kind as to the advisability of purchasing shares of the
Common Stock. Moreover, because such valuation is necessarily based upon
estimates and projections of a number of matters, all of which are subject to
change from time to time, no assurance can be given that persons who purchase
shares of common stock in the Conversion will thereafter be able to buy or sell
such shares at prices related to the foregoing valuation of the estimated pro
forma market value thereof.
RP Financial's valuation was determined based on the financial
condition and operations of the Bank as of April 30, 1997, the date of the
financial data included in the Company's prospectus.
RP Financial is not a seller of securities within the meaning of any
federal and state securities laws and any report prepared by RP Financial shall
not be used as an offer or solicitation with respect to the purchase or sale of
any securities. RP Financial maintains a policy which prohibits RP Financial,
its principals or employees from purchasing stock of its client institutions.
This valuation will be updated as provided for in the conversion
regulations and guidelines. These updates will consider, among other things,
any developments or changes in the Bank's financial performance and condition,
management policies, and current conditions in the equity markets for thrift
shares. These updates may also consider changes in other external factors
which impact value including, but not limited to: various changes in the
legislative and regulatory environment for financial institutions, the stock
market and the market for thrift stocks, and interest rates. Should any such
new developments or changes be material, in our opinion, to the valuation of
the shares, appropriate adjustments to the estimated pro forma market value
will be made. The reasons for any such adjustments will be explained in the
update at the date of the release of the update.
Respectfully submitted,
RP FINANCIAL, LC.
Ronald S. Riggins
President
<PAGE> 6
RP Financial, LC.
TABLE OF CONTENTS
STATEN ISLAND BANCORP, INC.
STATEN ISLAND SAVINGS BANK
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
----------- ------
<S> <C>
CHAPTER ONE OVERVIEW AND FINANCIAL ANALYSIS
- -----------
Introduction 1.1
Plan of Conversion and Holding Company Reorganization 1.1
Establishment of a Charitable Foundation 1.2
Strategic Overview 1.3
Balance Sheet Trends 1.7
Income and Expense Trends 1.12
Interest Rate Risk Management 1.17
Lending Activities and Strategy 1.18
Asset Quality 1.22
Funding Composition and Strategy 1.23
Trust Activities 1.24
Subsidiary Activities 1.24
Legal Proceedings 1.25
CHAPTER TWO MARKET AREA
- -----------
Introduction 2.1
National Economy 2.2
Market Area Demographics 2.5
Market Area Economy 2.9
Market Area Deposit Characteristics and Competition 2.11
CHAPTER THREE PEER GROUP ANALYSIS
- -------------
Selection of Peer Group 3.1
Financial Condition 3.8
Income and Expense Trends 3.11
Loan Composition 3.15
Interest Rate Risk 3.17
Credit Risk 3.17
Market Area and Competitive Characteristics 3.20
</TABLE>
<PAGE> 7
RP Financial, LC.
TABLE OF CONTENTS
STATEN ISLAND BANCORP, INC.
STATEN ISLAND SAVINGS BANK
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
DESCRIPTION NUMBER
----------- ------
<S> <C>
CHAPTER FOUR VALUATION ANALYSIS
- ------------
Introduction 4.1
Appraisal Guidelines 4.1
RP Financial Approach to the Valuation 4.1
Valuation Analysis 4.2
1. Financial Condition 4.3
2. Profitability, Growth and Viability of Earnings 4.4
3. Asset Growth 4.5
4. Primary Market Area 4.5
5. Dividends 4.6
6. Liquidity of the Shares 4.7
7. Marketing of the Issue 4.7
A. The Public Market 4.8
B. The New Issue Market 4.12
C. The Acquisition Market 4.13
8. Management 4.16
9. Effect of Government Regulation and Regulatory Reform 4.16
Summary of Adjustments 4.17
Valuation Approaches 4.17
1. Price-to-Book ("P/B") 4.19
2. Price-to-Earnings ("P/E") 4.20
3. Price-to-Assets ("P/A") 4.20
Comparison to Recent Conversions 4.21
Valuation Conclusion 4.21
</TABLE>
<PAGE> 8
RP Financial, LC.
LIST OF TABLES
STATEN ISLAND BANCORP, INC.
STATEN ISLAND SAVINGS BANK
<TABLE>
<CAPTION>
TABLE
NUMBER DESCRIPTION PAGE
------ ----------- ----
<S> <C> <C>
1.1 Historical Balance Sheets 1.8
1.2 Historical Income Statements 1.14
2.1 Selected Demographic Data 2.6
2.2 Median Household Income Trends 2.8
2.3 Market Area County Demographic/Economic Data 2.9
2.4 Market Area Unemployment Trends 2.11
2.5 Deposit Summary 2.12
3.1 Peer Group of Publicly-Traded Thrifts 3.4
3.2 Balance Sheet Composition and Growth Rates 3.10
3.3 Income as a Percent of Average Assets and Yields, Costs, Spreads 3.12
3.4 Loan Portfolio Composition and Related Information 3.16
3.5 Interest Rate Risk Measures and Net Interest Income Volatility 3.18
3.6 Credit Risk Measures and Related Information 3.19
4.1 Recent Conversions Pricing 4.14
4.2 Market Pricing Comparatives 4.15
4.3 Public Market Pricing 4.23
</TABLE>
<PAGE> 9
RP Financial, LC.
Page 1.1
I. OVERVIEW AND FINANCIAL ANALYSIS
Introduction
Staten Island Savings Bank ("SISB" or the "Bank") is a state-chartered
mutual savings bank headquartered in Staten Island, New York (Richmond County).
In addition to its main office facility, the Bank conducts banking operations
out of 16 full service branch offices in Staten Island, New York and one full
service branch office in Brooklyn, New York (Kings County). In addition, the
Bank operates three limited service branches (which presently do not accept
deposits but may in the future) and several administrative offices. A map of
the Bank's office locations is presented in Exhibit I-1. SISB was organized in
1864 and has operated in Staten Island and the surrounding communities since
that time. Prior to the stock conversion, the Bank will convert to a
federally-chartered savings bank, regulated by the Office of Thrift Supervision
("OTS") and become a member of the Federal Home Loan Bank ("FHLB") system.
SISB's deposits are insured up to the regulatory maximums by the Bank Insurance
Fund ("BIF"). As of April 30, 1997, SISB had $1.848 billion in assets, $1.607
billion in deposits and total equity of $177.3 million, or 9.59 percent of
total assets. Tangible equity was $157.5 million, or 8.52 percent of total
assets, after excluding intangible assets of $19.8 million. SISB's audited
financial statements are included by reference as Exhibit I-2 and key operating
ratios are included in Exhibit I-3.
Plan of Conversion and Holding Company Reorganization
On April 16, 1997, the Board of Directors of the Bank adopted a Plan
of Conversion, incorporated herein by reference, in which the Bank will
convert from mutual to stock form. Staten Island Bancorp, Inc. ("Bancorp" or
the "Company"), a Delaware corporation, was recently organized to facilitate
the conversion of SISB. In the course of the conversion, the Company will
acquire all of the capital stock that the Bank will issue upon its conversion
from the mutual to stock form of ownership. Going forward, Bancorp will own
100 percent of the Bank's stock, and the Bank will be Bancorp's sole
subsidiary. A portion of the net proceeds received from the
<PAGE> 10
RP Financial, LC.
Page 1.2
sale of common stock will be used to purchase all of the then to be issued and
outstanding capital stock of the Bank, with the balance of the proceeds being
retained by the Company.
At this time, no other activities are contemplated for the Company
other than the ownership of the Bank, a loan to the newly-formed employee stock
ownership plan ("ESOP") and investment of the Company's cash into short- to
intermediate-term investment securities. In the future, Bancorp may acquire or
organize other operating subsidiaries, diversify into other banking-related
activities, pay cash or stock dividends or repurchase its stock, although there
are no specific plans to undertake such activities at the present time.
Establishment of a Charitable Foundation
In order to enhance the Bank's existing historically strong service
and reinvestment activities in the local community, the Plan of Conversion
provides for the establishment of a private charitable foundation (the
"Foundation") in connection with the conversion. The Plan provides that the
Bank and the Company will create the Foundation and fund it with shares of
common stock contributed by the Company from authorized but unissued shares
immediately upon completion of the conversion in an amount equal to 5.0 percent
of the number of shares of common stock sold in the offering. The Bank
believes that the conversion transaction provides a unique opportunity to put
its well-regarded name on an entity that has significant value -- an
opportunity for corporate activities outside of core banking. The Foundation
is intended to complement the Bank's existing community reinvestment activities
and will be dedicated to the promotion of charitable purposes including, among
other things, health, education and welfare programs, community development
activities, cultural efforts, not-for-profit groups and other charitable
purposes within the communities served by the Bank. Funding the Foundation
with shares of common stock of Bancorp will enable the local community served
to share in the growth and the profitability of Bancorp over the long term
through potential dividends and price appreciation. As such, the Bank believes
the Foundation will generate a high level of community goodwill toward the
Bank, increase the Bank's local visibility and further enhance the Bank's
strong reputation for community service, thereby strengthening SISB's community
banking franchise.
<PAGE> 11
RP Financial, LC.
Page 1.3
The formation and issuance of shares to the Foundation will result in
dilution of pro forma book value and earnings per share as the Company will not
receive proceeds from the shares issued to the Foundation.
Strategic Overview
Throughout its corporate history, SISB's strategic focus has been that
of a community oriented financial institution, with a primary focus on meeting
the borrowing and savings needs of the local customer base. SISB's operations
are concentrated on Staten Island, as 16 of the Bank's 17 full service offices
and 3 limited service offices are located on Staten Island. Accordingly, SISB
enjoys a healthy market share and competitive position for 1-4 family loans and
retail deposits on Staten Island; however, the Bank's lack of geographic
expansion is viewed as a limiting factor for future growth opportunities,
particularly in view of the physical barriers imposed the island. The Bank's
branch network was assembled through de novo branching and acquisition in 1990
and 1995. The Bank acquired four branches in 1990, two of which were
subsequently consolidated. The 1995 acquisition, described more fully below,
led to the acquisition of five branches, two of which were subsequently
consolidated with other Bank branches.
The sole branch facility not located on Staten Island is located in
the Bay Ridge area of Brooklyn and was acquired in connection with the Bank's
acquisition of Gateway Bancorp, Inc. ("Gateway") in 1995. Gateway was a Staten
Island-based commercial bank, with over $300 million in total assets and 5 five
branches. SISB paid cash consideration of $57.9 million for Gateway, which
resulted in goodwill and core deposit intangibles totaling slightly more than
$22.0 million. Two of Gateway's branches were closed following the
acquisition, as the result of overlap with the Bank's branch facilities.
Gateway was acquired to facilitate SISB's strategic objective of gaining
entrance into commercial banking, enhancing the Bank's competitive position as
it strives to be a full service community bank. While the Gateway acquisition
served to enhance the yield and interest rate sensitivity of the Bank's loan
portfolio composition, credit quality was impaired as the result of problem
loans inherited from Gateway's loan portfolio and the Bank's overall credit
risk profile has increased. SISB's balance of non-performing assets increased
from $6.5 million at fiscal year end 1994 to $24.8 million at fiscal year end
1995, with
<PAGE> 12
RP Financial, LC.
Page 1.4
the balance of non-performing assets exhibiting little change during the past
one and one-third fiscal years. In fact, after gaining post-acquisition
experience with Gateway's performing and non-performing portfolios, the Bank
recently increased the allowance for loan losses.
Notwithstanding the lending diversification achieved through the
Gateway acquisition, SISB's loan portfolio remains concentrated in 1-4 family
permanent mortgage loans. Most of the Bank's recent loan growth has consisted
of 1-4 family permanent mortgage loans, resulting in an increased concentration
of such loans. As of April 30, 1997, 1-4 family permanent mortgage loans
totaled $755.5 million, or 75.9 percent, of the gross loan portfolio, versus
comparative measures of $594.9 million, or 72.7 percent, of the gross loan
portfolio at December 31, 1995. The commercial real estate and, to a lesser
extent, the multi-family loan portfolio has grown substantially following the
Gateway acquisition. As of April 30, 1997, SISB's commercial real
estate/multi-family loans collectively totaled $141.3 million, or 14.2 percent
of gross loans outstanding. Comparatively, at December 31, 1994, prior to the
acquisition of Gateway, the Bank's commercial real estate/multi-family loan
portfolio totaled $54.4 million, or 8.8 percent of gross loans outstanding.
Going forward, SISB intends to continue to emphasize commercial real estate and
commercial business lending, however, it is contemplated that the origination
of 1-4 family permanent mortgage loans will continue to remain the dominant
lending activity of the Bank.
A key asset/liability management strategy of the Bank is maintaining a
strong proportion of interest-earning assets in investment securities, serving
as an investment alternative to loans to support management of liquidity and to
provide the Bank with a steady source of cash flow. Mortgage-backed and
mortgage-related securities ("MBS") account for the largest segment of the
Bank's investment portfolio, which serve as a supplement to the Bank's
portfolio of 1-4 family permanent mortgage loans. The Bank's MBS portfolio
consists mostly of traditional pass-through securities which are guaranteed or
insured by a federal agency, with the balance of the MBS portfolio consisting
of a mixture of agency-backed and privately issued collateralized mortgage
obligations ("CMOs"). In managing the MBS portfolio, the Bank will emphasize
MBS purchases that complement its 1-4 family lending activities in terms of
interest rate sensitivity. In the current interest rate environment, SISB's
investment strategy has emphasized purchases of adjustable rate and short-term
MBS, which serve to offset the interest rate risk of originating
<PAGE> 13
RP Financial, LC.
Page 1.5
primarily fixed rate 1-4 family loans for portfolio. Recently, the Bank has
been purchasing MBS as a leveraging strategy, partly in anticipation of the
proceeds to be realized from the stock conversion. During the four months
ended April 30, 1997, short-term borrowings of approximately $30.0 million were
utilized to fund purchases of MBS. Management has indicated that further
leveraging will be pursued following the conversion, primarily through the use
of borrowings to fund purchases of MBS, subject to interest rates, market
conditions, liquidity, capital, profitability and other factors. As of April
30, 1997, the MBS portfolio totaled $494.5 million, with slightly more than
half consisting of fixed rate securities, and the estimated average life was
approximately 3.6 years.
The balance of the investment portfolio is concentrated in U.S.
Treasury and agency securities, which have laddered maturities of up to ten
years. SISB also maintains investments in equity securities, which includes a
small portfolio of trading equities. The trading equities portfolio, which
equaled $14.4 million at April 30, 1997, consists of two MBS funds that are
anticipated to be liquidated by the Bank by September 30, 1997.
SISB's deposit base reflects the composition of the local customers
and residents of Staten Island. The deposit base is characterized by a large
number of small depositors, with a significant balance of passbook savings
accounts (approximating 51.1 percent of total deposits at April 30, 1997). In
this regard, SISB's deposit composition has been a key profitability factor;
however, it is expected that future growth will be primarily funded by higher
costing certificates of deposit ("CDs") and borrowings, which will result in a
certain degree of erosion in the favorable yield-cost spread currently
maintained by the Bank.
The Bank's earnings composition is reflective of a traditional thrift
strategy, with pre-tax earnings being derived primarily from the net interest
margin offset by moderate operating expenses. The Bank's above average net
interest margin is supported by its low costing deposit composition, while the
interest income ratio is somewhat contained by SISB's maintenance of a
relatively high concentration of investments. Non-interest operating income
has been an increasing contributor to the Bank's earnings, which has been
supported by service and fee income realized from the acquisition of Gateway's
customer base. The acquisition of Gateway also increased SISB's operating
expense ratio, reflecting the generally higher operating expenses associated
with commercial banking operations, and, in particular, the more intensive
servicing
<PAGE> 14
RP Financial, LC.
Page 1.6
typically required of commercial bank accounts. Additionally, SISB acquired a
trust department in connection with the Gateway acquisition, which, given the
largely off-balance sheet activities of a trust department, further
contributed to the increase in the Bank's operating expense ratio. Total
assets under management by the trust department approximate $77 million in 179
accounts at April 30, 1997. The trust department is currently approaching a
break-even level. It the Bank's objective to turn the trust department into a
profit center, by establishing a niche in serving smaller balance trust
accounts (under $1.0 million) which tend to be ignored by the larger commercial
banks.
SISB's balance sheet is currently liability-sensitive, largely as the
result of the concentration of fixed rate mortgage loans in the loan portfolio.
The Bank's philosophy is to maximize earnings at an acceptable level of risk,
pursuing management of interest rate risk primarily through the asset side of
the balance sheet. Management of interest rate risk is supported by the Bank's
investment portfolio, which provides SISB with a steady source of cash flow
from maturing investments and repayment and prepayment of MBS. As previously
noted, SISB is currently emphasizing purchases of adjustable rate MBS to offset
the interest rate risk associated with originating primarily fixed rate 1-4
family loans. While interest rate risk management is further supported by the
relatively high level of savings accounts, providing a relatively low costing
source of funds, the Bank's advantage in this regard is subject to erosion as
further growth is expected to be concentrated in other sources of funds.
The Board of the Bank has elected to convert to the stock form of
ownership to support the continued expansion of the Bank's strategic focus of
providing competitive community banking services in its local market area. The
additional capital realized from conversion proceeds is expected to increase
liquidity to support loan growth, increase the capital cushion to absorb
unanticipated loss, enhance overall profitability and provide the capital for
additional growth. The additional funds realized from the conversion stock
offering will also serve as an alternative funding source to facilitate the
Bank's ability to offer competitive deposit rates. The stock form of
organization will facilitate the ability to fund the Foundation with shares of
stock.
SISB's higher equity-to-assets ratio will also better position the
Bank to take advantage of expansion opportunities as they arise. In light of
the Bank's market saturation on State Island, such expansion would most likely
occur through acquiring branches or other financial
<PAGE> 15
RP Financial, LC.
Page 1.7
institutions in markets that would provide SISB with geographic
diversification. At this time, the Bank has no specific plans for physical
expansion of office facilities. The projected use of conversion proceeds are
highlighted below.
Bancorp. Bancorp is expected to retain up to 50 percent of the net
conversion proceeds. At present, the Company funds, net of the loan
to the ESOP, are expected to be invested initially into short- and
intermediate-term investment securities with maturities ranging from
three to five years. Over time, the Company funds are anticipated to
be utilized for various corporate purposes, possibly including
acquisitions, infusing additional equity into the Bank, repurchases of
common stock, and the payment of regular and/or special cash
dividends. Additionally, the Company may seek to develop some fee
generating business lines which are synergistic with the Bank's
traditional banking operations.
SISB. At least 50 percent of the net conversion proceeds will be
infused into the Bank in exchange for all of the Bank's newly issued
stock. The increase in capital will be less, as the amount to be
borrowed by the ESOP to fund an 8 percent stock purchase will be
deducted from capital. Cash proceeds (i.e., net proceeds less
deposits withdrawn to fund stock purchases) infused into the Bank are
anticipated to become part of general operating funds, and are
expected to initially be invested in short-term investments, used to
repay short-term borrowings and/or to fund loan commitments or loans
in the pipeline.
SISB anticipates its post-conversion capital ratio will exceed
industry averages in the near term, leading to a below market return on equity
("ROE") until such time as the new capital can be leveraged or deployed in a
prudent manner.
Balance Sheet Trends
Growth Trends
As shown in Table 1.1, most of the Bank's asset growth since
year end 1992 was attributable to the acquisition of Gateway in 1995, which
added approximately $0.3 billion to the Bank's asset size, which was well over
half of the asset growth during the period. Over the period shown, SISB's
interest-earning asset composition has exhibited a shift toward loans,
reflecting steady growth of the Bank's loans, even before the addition of
$124.2 million in Gateway loans. The Bank's loan portfolio increased at a
19.3 percent annual rate, increasing from 34.1 percent of assets at fiscal year
end 1992 to 52.8 percent of assets at April 30, 1997,
<PAGE> 16
RP Financial, LC.
Page 1.8
Table 1.1
Staten Island Savings Bank
Historical Balance Sheets (1)
(Amount and Percent of Assets)
<TABLE>
<CAPTION>
For the Year Ended December 31,
---------------------------------------------------------------------------------------------
1992 1993 1994 1995(2)
-------------------- -------------------- -------------------- ----------------------
Amount Pct Amount Pct Amount Pct Amount Pct
------ --- ------ --- ------ --- ------ ---
($000) (%) ($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Amount of:
Assets $1,333,646 100.00% $1,365,543 100.00% $1,376,220 100.00% $1,728,130 100.00%
Loans receivable (net) 454,982 34.12% 513,803 37.63% 608,954 44.25% 801,137 46.36%
Cash & cash equivalents 54,405 4.08% 44,155 3.23% 29,984 2.18% 77,263 4.47%
Investment securities 785,823 58.92% 773,636 56.65% 699,470 50.83% 788,622 45.63%
Fixed assets 13,504 1.01% 13,194 0.97% 12,920 0.94% 16,680 0.97%
Intangible assets 1,564 0.12% 1,028 0.08% 492 0.04% 22,633 1.31%
Deposits 1,221,582 91.60% 1,223,708 89.61% 1,225,918 89.08% 1,535,617 88.86%
Borrowings 50 0.00% 49 0.00% 47 0.00% 46 0.00%
Net worth 98,516 7.39% 118,619 8.69% 125,444 9.12% 150,082 8.68%
AFS adjustment (970) -0.07% 2,873 0.21% (6,506) -0.47% 4,907 0.28%
Memo:
Loans/Deposits 37.25% 41.99% 49.67% 52.17%
IEA/IBL (Average) 1.09x 1.11x 1.13x 1.17x
Asset Quality
Non-Performing Loans $4,713 0.35% $7,717 0.57% $8,054 0.59% $24,215 1.40%
Real Estate Owned 1,755 0.13% 766 0.06% 373 0.03% 627 0.04%
----- ----- --- ----- --- ----- --- -----
Total Non-Performing Assets 6,468 0.48% 8,483 0.62% 8,427 0.61% 24,842 1.44%
Allowance for Loan Losses 2,303 0.17% 3,180 0.23% 3,124 0.23% 10,704 0.62%
Reserve Coverage Ratio 48.86% 41.21% 38.79% 44.20%
<CAPTION>
For the Year 12/31/92-
Ended December 31, 4/30/97
-------------------- As of April 30, Annualized
1996 1997 Growth Rate
-------------------- ---------------------- -----------------
Amount Pct Amount Pct Pct
------ --- ------ --- ----
($000) (%) ($000) (%) (%)
<S> <C> <C> <C> <C> <C>
Total Amount of:
Assets $1,782,323 100.00% $1,848,295 100.00% 7.82%
Loans receivable (net) 968,015 54.31% 976,501 52.83% 19.27%
Cash & cash equivalents 52,622 2.95% 113,744 6.15% 18.55%
Investment securities 703,134 39.45% 691,892 37.43% -2.90%
Fixed assets 18,675 1.05% 19,521 1.06% 8.88%
Intangible assets 20,490 1.15% 19,798 (3) 1.07% 79.64%
Deposits 1,577,748 88.52% 1,606,793 86.93% 6.53%
Borrowings 54 0.00% 30,043 1.63% 337.78%
Net worth 171,080 9.60% 177,295 9.59% 14.52%
AFS adjustment 4,130 0.23% 3,457 0.19% ---
Memo:
Loans/Deposits 61.35% 60.77%
IEA/IBL (Average) 1.20x 1.19x
Asset Quality
Non-Performing Loans $22,751 1.28% $24,415 1.32%
Real Estate Owned 1,103 0.06% 1,317 0.13%
----- ----- ----- -----
Total Non-Performing Assets 23,854 1.34% 25,732 1.39%
Allowance for Loan Losses 9,977 0.56% 14,687 0.79%
Reserve Coverage Ratio 43.85% 60.16%
</TABLE>
(1) Ratios are as a percent of ending assets.
(2) Gateway acquisition completed August 1995.
(3) Consists of $14.7 million goodwill and $5.1 million core deposit
intangible.
Sources: Staten Island's prospectus and audited financials.
<PAGE> 17
RP Financial, LC.
Page 1.9
with nearly one quarter of the growth stemming from the Gateway loans.
Comparatively, the investment securities balance has fluctuated throughout the
period, declining at a 2.9 percent annual rate overall. As of April 30, 1997,
investment securities equaled 37.4 percent of assets, versus a comparative
ratio of 58.9 percent at fiscal year end 1992. Cash and cash equivalents have
generally been maintained between 2.0 percent and 4.0 percent of assets;
however, as the result of recent repayment of loans secured by auto leases, the
Bank's ratio of cash and cash equivalents of 6.2 percent of assets at April 30,
1997 was somewhat inflated.
Fixed assets have increased at approximately the same rate as
the Bank's total asset growth, approximating 1.0 percent of assets throughout
the period shown in Table 1.1. The acquisition of Gateway resulted in a
notable increase in the intangible assets balance during 1995, with the balance
subsequently declining due to the amortization of the goodwill and core deposit
intangible. Goodwill of $15.6 million is being amortized on a straight-line
basis over 20 years and the core deposit intangible of $6.6 million is being
amortized on a straight-line basis for a period not exceeding six years.
Consistent with asset growth, most of the Bank's $385 million
deposit growth over the period was attributable to the acquisition of Gateway's
deposits, totaling nearly $277 million. Overall, the Bank's deposits increased
at an annual rate of 6.5 percent from fiscal year end 1992 through April 30,
1997, with 80 percent of the growth being realized during fiscal 1995. Deposit
growth did not keep pace with asset growth, declining from 92.0 percent of
assets at fiscal year end 1992 to 86.9 percent of assets at April 30, 1997, due
to capital growth and utilization of borrowed funds. Prior to fiscal 1997,
borrowings were not a material funding source utilized by the Bank.
Approximately $30 million of short-term borrowings were added during the first
four months of fiscal 1997 to fund purchases of MBS, as part of a leverage
strategy, equaling 1.6 percent of assets at April 30, 1997.
Loan Portfolio
SISB's loan portfolio has grown faster than assets since
fiscal year end 1992, reflecting the Bank's strategy of enhancing yields
through increasing the concentration of loans comprising interest-earning
assets. The primary emphasis of SISB's lending strategy is the origination of
1-4 family permanent mortgage loans. As of April 30, 1997, 1-4 family
permanent mortgage loans totaled $755.5 million, or 75.9 percent of the gross
loan portfolio, versus
<PAGE> 18
RP Financial, LC.
Page 1.10
comparative measures of $361.1 million, or 78.6 percent of gross loans
outstanding at fiscal year end 1992. In addition to the Bank's on-balance
sheet portfolio of 1-4 family permanent mortgage loans, SISB maintained a loans
serviced for others portfolio of $149.4 million at April 30, 1997, largely
represented by servicing transferred to the Bank by SONYMA from failed
institutions. SISB's current philosophy of retaining all 1-4 family loan
originations for portfolio is expected to result in a declining balance of
loans serviced for others going forward. Commercial real estate/multi-family
loans comprise the next largest segment of the loan portfolio, equaling $141.3
million, or 14.2 percent, of gross loans outstanding, at April 30, 1997, versus
comparative measures of $44.9 million, or 9.8 percent of gross loans
outstanding, at fiscal year end 1992. Most of the growth in commercial real
estate/multi-family loans was the result of commercial real estate loans
acquired in the Gateway acquisition.
The balance of the Bank's mortgage loan portfolio, consisting
of construction and land and home equity loans, has also exhibited positive
growth since fiscal year end 1992, increasing from $2.2 million, or 0.5 percent
of gross loans outstanding, at fiscal year end 1992 to $31.4 million, or 3.2
percent of gross loans outstanding, at April 30, 1997, due to recovery in local
housing markets, as well as growth facilitated by the Gateway acquisition.
Home equity loans increased slightly faster than total loan growth, increasing
from $12.6 million, or 2.7 percent of gross loans outstanding, at fiscal year
end 1992 to $29.9 million, or 3.0 percent of gross loans outstanding, at April
30, 1997.
As the result of repayment of loans secured by automobile
leases, which comprised the largest segment of the Bank's other loan portfolio,
SISB's current loan portfolio composition reflects a smaller proportion of
other loans. At fiscal year end 1996, SISB's consumer loan balance totaled
$48.4 million, or 4.9 percent of total loans outstanding, of which $28.2
million consisted of loans secured by automobile leases. Comparatively, as of
April 30, 1997, the consumer loan portfolio totaled $21.9 million, or 2.2
percent of total loans outstanding. The acquisition of Gateway served to
increase the Bank's diversification into commercial business lending, although
such loans continue to represent a minor area of lending diversification. As
of April 30, 1997, the Bank's commercial business loan portfolio totaled $15.3
million, or 1.5 percent of total loans outstanding, comprised of short-term
discounted loans
<PAGE> 19
RP Financial, LC.
Page 1.11
and amortizing loans. Commercial business lending is a desired growth area for
the Bank, which is expected to be facilitated by Gateway's commercial business
lending expertise.
Cash and Investments
The intent of the Bank's investment policy is to provide
adequate liquidity and to generate a favorable return within the context of
supporting SISB's overall credit and interest rate risk objectives. SISB
anticipates investing the net proceeds from the stock offering into investments
with short-term maturities, pending deployment into loans and investments that
are consistent with the Bank's current lending and investment strategies. Cash
and cash equivalents maintained by the Bank totaled $113.7 million at April 30,
1997, consisting mostly of federal funds sold ($74.2 million). As of April 30,
1997, the Bank's investments portfolio totaled $691.9 million, or 37.4 percent
of total assets. Except for a small trading portfolio of securities, all of
the Bank's securities are classified as available for sale (see Exhibit I-4).
The trading securities portfolio, which totaled $14.4 million at April 30, 1997
and consisted of two mutual funds invested in MBS, anticipated to be liquidated
by September 30, 1997. As of April 30, 1997, SISB maintained a pre-tax
unrealized gain on the available for sale portfolio of $6.6 million.
Investment securities are maintained as available for sale to provide
flexibility for liquidity and restructuring purposes. The $677.5 million
available for sale investment securities portfolio at April 30, 1997 was
concentrated in MBS, $494.5 million, consisting of agency participation
certificates ($399.2 million) and CMOs ($95.3 million). As of April 30, 1997,
the balance of the investment securities portfolio consisted U.S. Government
and agency securities ($140.1 million) and marketable equity securities ($41.8
million). In connection with the increase in capital to be realized from the
conversion proceeds, SISB plans to implement a leveraging strategy emphasizing
purchases of investment securities, largely MBS, funded by borrowings,
presently targeted to expand incrementally up to $500 to $600 million over an
18 month period assuming market conditions and interest rates support the
leverage strategy at such time.
Funding
Deposits are comprised of a large base of savings and
transaction accounts, with the balance of funds comprised of CDs. The Bank's
deposit growth over the period was largely attributable to the Gateway
acquisition in fiscal 1995. Prior to fiscal 1997 leveraging, the Bank was not
an active user of borrowings. In light of the Bank's contemplated leveraging
strategy,
<PAGE> 20
RP Financial, LC.
Page 1.12
borrowings are expected to become a more significant funding source.
Short-term reverse repurchase agreements currently account for the Bank's
primary source of borrowings. Upon its charter conversion to a federal savings
bank, the Bank will become a member of the FHLB of New York. It is anticipated
that FHLB advances will also be utilized to fund the Bank's leveraging
strategy.
Capital
Positive earnings over the period translated into an annual
capital growth rate 14.5 percent. As the result of the goodwill and core
deposit intangible created by the Gateway acquisition, tangible capital growth
for the Bank equaled 11.8 percent over the same time period. Intangible assets
resulting from the Gateway acquisition approximated $22.2 million, consisting
of $15.6 million of goodwill and $6.6 million of core deposit intangibles. As
of April 30, 1997, the Bank's GAAP and tangible equity-to-assets ratios equaled
9.59 percent and 8.52 percent, respectively. SISB's April 30, 1997 capital
ratios included a net unrealized gain of $3.5 million on investment securities
maintained as available for sale. The Bank maintained capital surpluses
relative to all of its regulatory capital requirements at April 30, 1997 on a
pre-conversion basis, as summarized in the table below. The addition of
conversion proceeds will serve to substantially strengthen SISB's financial
condition and future growth potential.
<TABLE>
<CAPTION>
Capital
Over
Required Actual Required
Capital Capital Amount
-------- ------- ------
($000) ($000) ($000)
<S> <C> <C> <C>
Tangible Capital $27,376 $154,040 $126,664
Core Capital 54,751 173,838 119,087
Total Risk-Based Capital 67,195 164,539 97,344
</TABLE>
Source: Prospectus.
Income and Expense Trends
The Bank has reported positive earnings over the period, ranging from
a low of 0.88 percent of average assets in fiscal 1995 to a high of 1.24
percent of average assets in fiscal 1996
<PAGE> 21
RP Financial, LC.
Page 1.13
(see Table 1.2). For the twelve months ended April 30, 1997, the Bank reported
net income of $21.8 million, equal to 1.22 percent of average assets.
Consistent with the Bank's traditional thrift operating strategy, net interest
income and operating expenses represent the major components of core earnings.
While the Bank's acquisition of Gateway served to increase the contribution of
non-interest operating income to earnings, such income remains a relatively
minor component of SISB's earnings. Loss provisions and securities sales have
had a varied impact on the Bank's earnings since fiscal 1992, most recently
negatively impacting SISB's earnings to a greater degree than what has
historically been recorded by the Bank. SISB's fiscal 1993 earnings were
adversely impacted by a non-recurring accounting adjustment, reflecting the
Bank's adoption of (SFAS 106 "Employers' Accounting for Post-Retirement
Benefits Other than Pensions"). The adoption of SFAS 106 reduced the Bank's
fiscal 1993 after-tax earnings by approximately $1.5 million. The Bank's
earnings in fiscal 1995 were adversely impacted by a one time accounting
adjustment, relating to the Bank's adoption of SFAS 109 in which the Bank began
providing for deferred taxes for the New York State and New York City bad debt
deduction which had accumulated since 1987. The cumulative effect of the SFAS
109 accounting change reduced the Bank's after-tax earnings by approximately
$4.7 million. In 1996 and 1997 the New York State and New York City tax laws
were amended, which led to a reversal of such tax reserves, $2.1 million in
1996 and $2.6 million in 1997, respectively. Such reversals reduced the
effective tax rates for the respective periods.
SISB has maintained a healthy net interest margin throughout the
period shown in Table 1.2, which has been supported by the Bank's relatively
low costing funding composition. After dropping to 3.88 percent in fiscal
1994, the Bank's net interest income to average assets ratio has increased
steadily to equal 4.33 percent for the twelve months ended April 30, 1997. The
increase in the Bank's net interest income has been largely attributable to an
improving interest income to average assets ratio, which expectedly increased
from 6.52 percent during fiscal 1994 to 7.15 percent during the twelve months
ended April 30, 1997, given the overall increase in loans/assets ratio and
increase in the proportion of high risk weight loans from the Gateway
acquisition. The positive trend in the interest income ratio was partially
negated by a rising interest expense ratio over the same period, which was
largely attributable to higher funding costs resulting from a shift in SISB's
deposit composition to a higher concentration of CDs,
<PAGE> 22
RP Financial, LC.
Page 1.14
Table 1.2
Staten Island Savings Bank
Historical Income Statements
(Amount and Percent of Assets)(1)
<TABLE>
<CAPTION>
For the Year Ended December 31,
-------------------------------------------------------------------
1992 1993 1994
------------------ -------------------- --------------------
Amount Pct Amount Pct Amount Pct
------ --- ------ --- ------ ---
($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C>
Interest Income $96,057 7.64% $93,152 6.93% $90,284 6.52%
Interest Expense (49,454) -3.93% (38,327) -2.85% (36,537) -2.64%
-------- ------ -------- ------ -------- ------
Net Interest Income $46,603 3.71% $54,825 4.08% $53,747 3.88%
Provision for Loan Losses (2,271) -0.18% (1,335) -0.10% (76) -0.01%
------- ------ ------- ------ ---- ------
Net Interest Income after Provisions $44,332 3.53% $53,490 3.98% $53,671 3.88%
Other Income $2,017 0.16% $3,238 0.24% $2,807 0.20%
Operating Expense (23,467) -1.87% (24,873) -1.85% (25,557) -1.85%
Net Operating Income $22,882 1.82% $31,855 2.37% $30,921 2.23%
Gain(Loss) on Securities Transactions ($561) -0.04% $69 0.01% ($759) -0.05%
Net Income Before Taxes $22,321 1.78% $31,924 2.38% $30,162 2.18%
Income Taxes (9,746) -0.78% (14,150) -1.05% (13,958) -1.01%
------- ------ -------- ------ -------- ------
Net Inc(Loss) Before Extraordinary Items $12,575 1.00% $17,774 1.32% $16,204 1.17%
Cumulative Effect of Change in
Changes in Accounting $0 0.00% ($1,514) (3) -0.11% $0 0.00%
-- ----- ------- ------ -- -----
Net Income (Loss) $12,575 1.00% $16,260 1.21% $16,204 1.17%
Earnings Excluding Non-Operating and Extraord. Items:
- -----------------------------------------------------
Net Income Before Taxes $22,321 1.78% $31,924 2.38% $30,162 2.18%
Addback(Deduct): Non-Recurring (Inc)/Exp 561 0.04% (69) -0.01% 759 0.05%
Tax Effect (9,991) -0.79% (14,119) -1.05% (14,309) -1.03%
------- ------ -------- ------ -------- ------
Earnings Excl. Non-Op./Extraord Items: $12,891 1.03% $17,736 1.32% $16,612 1.20%
Memo:
Expense Coverage Ratio 198.59% 220.42% 210.30%
Efficiency Ratio 47.16% 41.91% 44.24%
Reported Effective Tax Rate 43.66% 44.32% 46.28%
<CAPTION>
For the Year Ended December 31, Trailing Twelve
--------------------------------------------- Months Ended
1995(2) 1996 April 30, 1997
-------------------- --------------------- -----------------------
Amount Pct Amount Pct Amount Pct
------ --- ------ --- ------ ---
($000) (%) ($000) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C>
Interest Income $104,356 6.94% $124,430 7.09% $128,149 7.15%
Interest Expense (44,234) -2.94% (50,437) -2.87% (50,597) -2.82%
-------- ------ -------- ------ -------- ------
Net Interest Income $60,122 4.00% $73,993 4.21% $77,552 4.33%
Provision for Loan Losses 0 0.00% (1,000) -0.06% (5,667) -0.32%
- ----- ------- ------ ------- ------
Net Interest Income after Provisions $60,122 4.00% $72,993 4.16% $71,885 4.01%
Other Income $4,345 0.29% $6,639 0.38% $6,980 0.39%
Operating Expense (32,953) -2.19% (40,066) -2.28% (41,689) -2.33%
-------- ------ -------- ------- -------- ------
Net Operating Income $31,514 2.10% $39,566 2.25% $37,176 2.07%
Gain(Loss) on Securities Transactions ($305) -0.02% ($2,710) -0.15% ($3,436) -0.19%
Net Income Before Taxes $31,209 2.08% $36,856 2.10% $33,740 1.88%
Income Taxes (13,284) -0.88% (15,081) -0.86% (11,945) -0.67%
-------- ------- -------- ------ -------- ------
Net Inc(Loss) Before Extraordinary Items $17,925 1.19% $21,775 1.24% $21,795 1.22%
Cumulative Effect of Change in
Changes in Accounting ($4,700) (4) -0.31% 0 0.00% 0 0.00%
-------- ------ - ----- - -----
Net Income (Loss) $13,225 0.88% $21,775 1.24% $21,795 1.22%
Earnings Excluding Non-Operating and Extraord. Items:
- -----------------------------------------------------
Net Income Before Taxes $31,209 2.08% $36,856 2.10% $33,740 1.88%
Addback(Deduct): Non-Recurring (Inc)/Exp 305 0.02% 2,710 0.15% 3,436 0.19%
Tax Effect (13,414) -0.89% (18,596) (5) -1.06% (17,473) (5) -0.98%
-------- ------ -------- ------ -------- ------
Earnings Excl. Non-Op./Extraord Items: $18,100 1.20% $20,970 1.19% $19,703 1.10%
Memo:
Expense Coverage Ratio 182.45% 184.68% 186.03%
Efficiency Ratio 50.09% 47.03% 46.86%
Reported Effective Tax Rate 42.56% 40.92% 35.40%
</TABLE>
(1) Ratios are as a percent of average assets. Average assets calculated
based on annual average.
(2) Gateway acquisition completed August 1995.
(3) Reflects SFAS 106 adjustment.
(4) Reflects SFAS 109 adjustment for differences in New York State and New
York City taxes relative to Federal taxes regarding bad debt reserves.
(5) Excludes reversal of $2.1 million and $2.6 million in calendar 1996 and
the first four months of 1997, respectively, of previously deferred
income taxes related to bad debt reserves for New York State and New York
City purposes. Effective statutory tax rate of 47.0 percent is used for
1996 and 1997 computations.
Sources: Staten Island's prospectus and audited financials.
<PAGE> 23
RP Financial, LC.
Page 1.15
despite the core deposits gained from Gateway. The recent decline exhibited in
the Bank's interest expense ratio was primarily attributable to declining
deposit rates, an improving capital ratio (and resultant decline in the
proportion of interest-bearing liabilities).
The impact of interest rates on SISB's net interest income is further
revealed through examination of the Bank's historical net interest rate spreads
and yields and costs set forth in Exhibit I-5. Trends in the Bank's net
interest margin generally paralleled the trends in the yield-cost spread.
SISB's yield-cost spread peaked at 4.02 percent during the four months ended
April 30, 1997, versus a comparative low of 3.48 percent during fiscal 1992.
As indicated in the ratios for interest income and interest expense, the
widening the of Bank's yield-cost spread was substantially realized through an
increasing yield earned on interest-earning assets. Going forward, it will be
difficult for the Bank to maintain the yield-cost spread at current levels, in
light of the trend of shifting deposit composition towards CDs, and the
narrower spreads available through leveraging.
Non-interest operating income has been a relatively modest contributor
to earnings, reflecting the Bank's historical traditional thrift emphasis.
Throughout the period shown in Table 1.2, non-interest operating income ranged
from a low of 0.16 percent of average assets in fiscal 1992 to a high of 0.39
percent of average asset for the twelve months ended April 30, 1997. The
positive trend exhibited in the Bank's non-interest operating income ratio was
supported by Gateway's greater fee oriented transaction accounts and other
activities. Growth in the Bank's non-interest operating income is expected to
be gradual.
Prior to the acquisition of Gateway, the Bank's traditional operating
strategy served to contain operating expenses at less than 2.0 percent of
average assets. With the acquisition of Gateway's more service intensive
commercial banking operations, SISB's operating expense to average assets ratio
increased notably during fiscal 1995 and has continued to trend higher, even
before the amortization of intangible assets attributable to the Gateway
acquisition. The expense related to the amortization of intangible assets
equaled $2.1 million, or 0.12 percent of average assets, for the twelve months
ended April 30, 1997, versus comparative measures of $536,000, or 0.04 percent
of average assets, during fiscal 1994. As of April 30, 1997, the Bank
maintained approximately 500 full time and 107 part-time employees, resulting
in assets per full-time equivalent employee of $3.3 million. The Bank's assets
per full-time equivalent employee
<PAGE> 24
RP Financial, LC.
Page 1.16
measure is less than the industry average for all publicly-traded thrifts,
which, again, is partially attributable to the more personnel intensive
characteristics of SISB's commercial banking operation.
Further upward pressure will be placed on the Bank's operating
expenses in the forthcoming year due to planned growth of SISB's commercial
banking operations, data processing conversion/upgrade and expected costs
associated with operating as a publicly-traded company, including expenses
related to the stock benefit plans. At the same time, the Bank's contemplated
leveraging strategy should serve to reduce operating expenses as a percent of
average assets.
SISB's efficiency ratio (operating expenses, net of amortization of
intangibles, as a percent of the sum of net interest income and other operating
income) of 46.9 percent for the twelve months ended April 30, 1997 was less
favorable than the 44.2 percent efficiency ratio maintained during fiscal 1994.
However, the trend in the Bank's efficiency ratio has been positive since
peaking at 50.1 percent during fiscal 1995.
Loan loss provisions have impacted the Bank's earnings to various
degrees over the last several years, ranging from a low of no loss provisions
during fiscal 1995 to a high of 0.32 percent of average assets during the
twelve months ended April 30, 1997. The higher loss provisions established
during the most recent twelve month period addressed the increase in
non-performing assets and the higher credit risk profile. As of April 30,
1997, the Bank maintained allowance for loan losses of $14.7 million, equal to
60.2 percent of non-performing loans (see Exhibit I-6).
Gains and losses resulting from the sale of investment securities,
which typically have not been a significant factor in the Bank's earnings,
reflect the ongoing management of the investment securities portfolio. Losses
on the sale of investment securities had a more notable impact on the Bank's
earnings during fiscal 1996 and the most recent twelve month period, with such
losses equaling 0.15 percent and 0.19 percent of average assets, respectively.
The losses were related to restructuring of the investment portfolio for yield
enhancement purposes, as well as for tax purposes. Additionally, the slightly
higher loss recorded during the most recent twelve
<PAGE> 25
RP Financial, LC.
Page 1.17
month period reflects that partial liquidation of the two MBS funds held by the
Bank as trading securities.
SISB's effective tax rate has ranged from a low of 35.4 percent during
the twelve months ended April 30, 1997 to a high of 46.3 percent during fiscal
1994. The relatively low effective tax rate posted during the most recent
twelve month period was attributable to the reversal of $4.7 million of
previously deferred income taxes related to the bad debt reserves accumulated
for New York State and New York City purposes ($2.1 million in 1996 and $2.6
million in 1997). The reversal was the result of differences between the New
York State and New York City tax laws which separated the city and state laws
from the Federal tax laws relating to bad debt reserves and maintained the PTI
deduction for both the city and state and eliminated the potential recapture of
previous city and state reserves. SISB currently maintains an effective
statutory tax rate of approximately 47.0 percent.
Interest Rate Risk Management
Based on financial data as of April 30, 1997, the Bank's one and three
year cumulative gap ratios equaled negative 6.9 percent and negative 7.1
percent, respectively (see Exhibit I-7), and the ratio of interest-earning
assets to interest-bearing liabilities maturing or repricing within one year
was 79.3 percent. In addition, the Bank evaluates its interest rate risk
through forecasting the impact of alternative interest rate environments (rate
shock analyses) on net interest income and market value of portfolio equity
("MVPE"). The following table summarizes the rate shock analyses under four
rate scenarios as of April 30, 1997, illustrating greater vulnerability under a
rising rate environment.
<TABLE>
<CAPTION>
Estimated Percent Change
------------------------
Change in Interest Rates Net Interest Income
(Basis Points) (Next 4 Quarters) MVPE
-------------- ----------------- ----
<S> <C> <C>
+400 (38.4)% (32.5)%
+200 (18.6) (18.5)
-200 14.8 6.6
-400 12.3 20.1
</TABLE>
Source: Prospectus.
The Bank, through the Asset and Liability Management Committee
("ALCO"), primarily manages interest rate risk from the asset side of the
balance sheet by emphasizing investment in
<PAGE> 26
RP Financial, LC.
Page 1.18
short- and intermediate-term investments, which provide SISB with a steady
source of cash flow. In the current interest rate environment, the Bank has
emphasized investing in adjustable rate and short-term MBS to offset the
interest rate risk associated with originating primarily fixed rate 1-4 family
loans for portfolio. The investment portfolio is primarily classified as
available for sale, and, thus, could be readily sold if interest rate
conditions warrant such action. Diversification into other types of interest
rate sensitive types of lending further supports SISB's management of interest
rate risk. As of April 30, 1997, of the total loans due after April 30, 1998,
ARM loans comprised 43.7 percent of those loans. The deposit composition
featuring a high concentration of lower costing and less interest rate
sensitive transaction and savings accounts serves to reduce the Bank's interest
rate risk exposure.
The infusion of stock proceeds will serve to further limit Bank's
interest rate risk exposure, as most of the net proceeds will be redeployed
initially into short-term investments and the increase to capital will lessen
the proportion of interest-bearing liabilities.
Lending Activities and Strategy
The Bank's lending activities have emphasized the origination of 1-4
family permanent mortgage loans (see Exhibits I-8 and I-9, which reflect loan
composition and lending activity, respectively). As of April 30, 1997, 1-4
family permanent mortgage loans accounted for $755.5 million, or 75.9 percent
of total loans outstanding. Commercial real estate/multi-family loans
represent the most significant area of lending diversification for SISB, with
the acquisition of Gateway serving to notably increase the size of the Bank's
commercial real estate loan portfolio. To a more limited extent, the Bank's
loan portfolio includes diversification into construction and land loans, home
equity loans, consumer loans and commercial business loans. Notwithstanding
the growth in loan diversification provided by the Bank's acquisition of
Gateway, the current concentration of 1-4 family permanent mortgage loans
comprising the loan portfolio is consistent with historical levels. The
concentration of 1-4 family permanent mortgage loans has been attributable to
SISB's recent philosophy of retaining substantially all 1-4 family loan
originations for its own portfolio. Exhibit I-10 provides the contractual
maturity of the Bank's loan portfolio, by loan type, as of April 30, 1997.
<PAGE> 27
RP Financial, LC.
Page 1.19
SISB originates both fixed rate and adjustable rate permanent 1-4
family loans, with all originations currently being retained for portfolio. In
the current interest rate environment, fixed rate loans have accounted for most
of the Bank's 1-4 family loan volume. Fixed rate loans offered by the Bank
currently have terms of 15 to 30 years and are offered with either bi-weekly or
monthly repayment terms. To enhance the attractiveness of ARM loans, SISB
offers a variety of terms, including offering initial rates discounted from the
fully-indexed rate. In addition to the standard one year ARM loan, SISB offers
ARM loans which reprice every three and five years and a 10/1 ARM that is fixed
for 10 years and adjusts annually thereafter. ARM loans are indexed to the
comparable term U.S. Treasury note rate, with the initial rate of interest
being dependent upon the length of the repricing term (i.e., a higher rate is
charged for loans with a longer repricing term). The current repricing margin
for owner-occupied 1-4 family residential ARM loans is 2.75 percent above the
applicable index, subject to period repricing caps of 2.0 to 3.0 percent and
life time repricing caps of 5.0 to 6.0 percent.
Most 1-4 family loan originated by SISB are underwritten to conform to
agency secondary market standards, including Federal Home Loan Mortgage
Corporation ("FHLMC") and Federal National Mortgage Association ("FNMA"). The
Bank has recently began to offer low documentation 1-4 family loans at slightly
higher rates than the comparable rates offered for fully documented loans. Low
documentation loans are originated up to a maximum loan-to-value ("LTV") ratio
of 70.0 percent. Currently, the origination of conventional loans account for
the majority of the Bank's 1-4 family lending activities.
Commercial real estate and multi-family loans originated by the Bank
are collateralized by properties in the normal lending territory and consist
substantially of loans with balances of less than $1.0 million. Commercial
real estate and multi-family loans are generally extended up to an LTV ratio of
75.0 percent, and require a debt service ratio of 1.25 times. Most of the
income producing commercial real estate and multi-family loans originated by
SISB are ARM loans indexed to U.S. Treasury securities of equivalent maturity
as the repricing period, with amortization terms of up to 25 years. Consistent
with the higher credit risk associated with commercial real estate and
multi-family loans, loan rates offered on those loans are at a premium to the
Bank's 1-4 family loan rates. Properties securing the commercial real estate
and multi-family loan portfolio include apartment buildings, office buildings,
shopping centers, retail
<PAGE> 28
RP Financial, LC.
Page 1.20
establishments, a medical office, and various other income producing
properties. Commercial real estate lending is viewed as a desired growth area
for SISB.
The Bank's diversification into construction and land lending has been
somewhat limited, with such lending emphasizing loans for the construction of
single-family homes and single-family lots. Most of the Bank's construction
loans are extended to local builders as speculative ("spec") loans to build
single-family homes on Staten Island. Construction loans require payment of
interest only during the construction period and are extended for terms of up
to two years. An LTV ratio of 75.0 percent or less is required for
construction loans, which are typically variable rate loans tied to the Prime
Rate. To limit the credit risk associated with the spec construction loans,
the Bank typically only finances model homes on a spec basis. Construction
loans for commercial properties constitute a minor portion of the Bank's
construction lending activities, with such loans being extended for the
construction of local properties on a non-speculative basis.
Land loans serve as a complement to the Bank's construction lending
activities, as they generally are extended for the development of single-family
lots. On a more limited basis, the Bank originates land loans on commercial
properties. Terms of land loans offered by the Bank generally require an LTV
ratio of 60.0 percent or less and are variable rate loans tied to the Prime
Rate. Land loans are interest only loans and generally have terms of up to two
years. While the current market for the construction of local housing is
viewed as being relatively favorable, construction and land lending are not
expected to be notable areas of lending growth for SISB.
The balance of the mortgage loan portfolio consists of home equity
loans, which are offered both as amortizing loans and lines of credit. SISB's
amortizing home equity loan product is extended for terms of up to 15 years,
with a maximum LTV ratio of 80.0 percent of the combined outstanding debt on
the property, subject to a maximum loan amount of $100,000. Home equity lines
of credit are tied to the Prime Rate and are extended up to a maximum LTV ratio
of 75.0 percent. Lines of credit can be accessed up to a maximum balance of
$250,000, with interest only payable during the first five years of loan.
After five years, the loan is amortized over a fifteen or twenty year period.
The recovery of the local housing market from the downturn in real estate
values that occurred in the late-1980s and early-1990s should
<PAGE> 29
RP Financial, LC.
Page 1.21
facilitate growth of the Bank's home equity loan portfolio, although such
growth is not expected to be significant.
Diversification into non-mortgage types of lending includes both
consumer and commercial business loans. Consumer lending for the Bank has been
limited, particularly following the recent repayment of loans secured by
automobile leases. The loans secured by automobile leases were satisfied by
the originating company (Oxford Resource Corporation), as the result of the
originating company being acquired. Consumer loans currently held by SISB
include passbook loans, student loans, personal lines of credit and other
miscellaneous closed end loans. SISB's student loan balance dropped sharply in
1995, as the result of a decision to sell those student loans that are on
repayment to Sallie Mae. Accordingly, the amount of student loans currently
held by the Bank consist of loans outstanding to in-school students. In
connection with SISB's strategy of positioning itself as a community bank,
consumer lending is a desired growth area for the Bank, although such growth is
expected to be slow.
SISB's commercial business lending function has been largely the
result of the Gateway acquisition. Commercial business loans offered by the
Bank are generally extended as floating rate loans tied to the Prime Rate or
short-term fixed rate loans with terms of less than five years. Approximately
25 percent of the commercial business loan portfolio is unsecured. A notable
portion of the commercial business loan portfolio consist of discounted loans,
which are short-term notes extended to local businesses for cash flow purposes
(generally for 60 to 90 days). Discounted loans are non-amortizing loans, in
which the difference between the proceeds received by the borrower and the
amount due on the note is the interest to be paid by the borrower. Commercial
business lending is being emphasized as a lending growth area for the Bank.
Exhibit I-9, which shows the Bank's loan originations, purchases and
sales over the past three and one-third fiscal years, indicates SISB's emphasis
on 1-4 family mortgage lending. Beyond 1-4 family loans, other consumer loans
have represented the most notable area of originations for the Bank; however,
since such originations consist substantially of amounts drawn on overdraft
accounts which have very short repayment terms, the high volume of other
consumer loan originations has not translated into growth of the consumer loan
portfolio. Similarly, relatively high lending volumes were reflected for
discounted loans, but growth of the
<PAGE> 30
RP Financial, LC.
Page 1.22
discounted loan portfolio balance was also limited by their short repayment
terms (typically 90 days or less). Total originations have shown a steady
upward trend since fiscal 1994, increasing from $165.0 million in fiscal 1994
to $287.9 million in fiscal 1996 and $89.9 million for the four months ended
April 30, 1997. Growth in originations has translated into positive loan
growth over the past three and one-third fiscal years, as originations have
exceeded repayments throughout the period. Loan growth was further supported
by the acquisition of the Gateway loans during fiscal 1995, which totaled
$124.2 million. Beyond the loans acquired in the Gateway merger, the Bank has
not been an active purchaser of loans over the past three and one-third fiscal
years. Similarly, loan sales have constituted a minor portion of the Bank's
lending activities in recent years, consisting substantially of the sale of
student loans which are on repayment to Sallie Mae and the repayment of loans
secured by automobile leases. Going forward, Bank's lending strategy is to
place a greater emphasis on the origination of commercial real estate and
commercial business loans, although the origination of 1-4 family permanent
mortgage loans is expected to remain the Bank's primarily lending activity for
the intermediate term.
Asset Quality
SISB's historical 1-4 family lending emphasis and relatively low level
of loans comprising interest-earning assets have generally served to limit
credit quality problems. As the result of problem loans inherited in the
Gateway acquisition, the Bank's balance of non-performing assets increased
considerably during fiscal 1995. Since the acquisition, there has been little
change exhibited in the Bank's non-performing assets balance. As of April 30,
1997, SISB's classified assets totaled $30.2 million, all of which were
classified substandard.
As shown in Exhibit I-11, SISB's non-performing assets ratio increased
from 0.61 percent of assets at fiscal year end 1994 to 1.44 percent of assets
at fiscal year end 1995. Most of the increase in non-performing assets
consisted of non-accruing commercial real estate loans and single-family
residential loans, which were inherited in the Gateway acquisition. As of
April 30, 1997, the Bank's non-performing assets ratio equaled 1.39 percent of
assets. The Bank's non-performing assets at April 30, 1997 consisted of $24.4
million of non-accruing loans and $1.3 million of other real estate owned. Of
the Bank's $25.7 million of non-performing assets at April
<PAGE> 31
RP Financial, LC.
Page 1.23
30, 1997, 55.5 percent relate to loans underwritten by Gateway and acquired by
the Bank. Single-family and commercial real estate loans accounted for two
largest concentrations of the Bank's non-accruing loans, totaling $10.0 million
and $8.9 million, respectively, at April 30, 1997.
Allowances for loan losses are established by the Bank based on the
credit quality of the loan portfolio, the size and composition of the loan
portfolio and trends in the local economy, among other factors. In response to
the lengthy resolution of loans acquired in the Gateway acquisition, coupled
with an increase in the loans/assets ratio and growth in higher risk weight
loans, the Bank established $4.7 million of loss provisions during the four
months ended April 30, 1997. As of April 30, 1997, SISB maintained $14.7
million of valuation allowances, equal to 1.48 percent of net loans receivable
and 60.2 percent of non-performing assets.
Funding Composition and Strategy
Deposits have consistently been the Bank's primary source of funds and
at April 30, 1997 deposits accounted for 98.2 percent of SISB's
interest-bearing liabilities. Exhibit I-12 sets forth the Bank's historical
deposit composition and Exhibit I-13 provides the interest rate and maturity
composition of the CD portfolio at April 30, 1997. The Bank's deposit
composition has consistently reflected a relatively large concentration in
transaction and savings accounts, amounting to $1.1 billion, or 67.2 percent of
total deposits at April 30, 1997. Savings accounts represent the most
significant component of the Bank's transaction and savings accounts, amounting
to $822.4 million, or 76.2 percent, of savings and transaction accounts at
April 30, 1997. The high concentration of savings accounts maintained by the
Bank is supported by an elderly customer base, who have traditionally
maintained their funds in savings accounts, although the trends in this regard
are unfavorable.
The remainder of the Bank's deposit base consists of CDs, with SISB's
current CD composition reflecting a higher concentration of short-term CDs
(maturities of less than one year). As of April 30, 1997, the CD portfolio
totaled $527.6 million, or 32.8 percent of total deposits, with 73.5 percent of
those CDs having maturities of one year or less. Jumbo CDs (CD accounts with
balances of $100,000 or more) amounted to $108.1 million, or 20.5 percent of
CDs and 6.7 percent of total deposits. SISB typically does not pay a premium
rate for higher
<PAGE> 32
RP Financial, LC.
Page 1.24
balance CDs. Notwithstanding the relatively low concentration of CDs
comprising deposits, most of the Bank's recent deposit growth has consisted of
CDs. In comparison to the 32.8 percent ratio maintained at April 30, 1997, CDs
comprised only 23.4 percent of total deposits at fiscal year end 1994.
Borrowings typically have not been a prominent funding source for the
Bank, although borrowings were added during the four months ended April 30,
1997 for leveraging purposes in anticipation of the conversion transaction.
During fiscal 1997, the Bank added approximately $30.0 million of borrowings to
fund purchases of investment securities and loan growth. Borrowings held by
the Bank consist substantially of reverse repurchase agreements. In connection
with the Bank's leveraging strategy, borrowings are expected to be utilized to
a greater degree by SISB going forward. In 1997, the Bank became eligible to
obtain FHLB advances from the FHLB of New York, which may be utilized to fund
part of the Bank's leveraging strategy.
Trust Activities
SISB maintains a Trust Department, as the result of the Gateway
acquisition. Fiduciary trust, estate and investment services are provided
primarily to persons and entities located on Staten Island. Services offered
include financial services related to trusts and estates, money management,
custodial services, pension and employee benefits consulting and plan
administration, tax advice and preparation and accounting services. As of
April 30, 1997, the Trust Department maintained approximately 179
trust/fiduciary accounts, with an aggregate principal balance of $77 million at
such date. Revenues from the Trust Department Division amounted to $85,300 in
the four months ended April 30, 1997 and $258,000 and $280,000 in 1996 and
1995, respectively. The Trust Department is currently operating at an
approximately break-even level.
Subsidiary Activities
The Bank has no active subsidiary activities at this time.
<PAGE> 33
RP Financial, LC.
Page 1.25
Legal Proceedings
The Bank is involved in routine legal proceedings occurring in the
ordinary course of business which, in the aggregate, are believed by management
to be immaterial to the financial condition of the Bank.
<PAGE> 34
RP Financial, LC.
Page 2.1
II. MARKET AREA
Introduction
The Bank conducts operations through a network of 16 branch offices on
Staten Island and one branch in the Bay Ridge area of Brooklyn. The Bank has
acquired eight branches -- three from Nassau Federal Savings and Loan
Association (from the Resolution Trust Corporation (RTC) in 1990) and five as
part of the 1995 Gateway acquisition -- and subsequently closed four of the
acquired branches, two from each acquisition. The Brooklyn branch was acquired
in conjunction with the Gateway acquisition. The Bank also maintains an
executive office, a loan origination center, a human resources office, a
storage facility and two drive-up facilities. All of the branches include at
least two 24 hour access ATMs. Exhibit II-1 displays a list of the Bank's
offices.
The Bank currently holds approximately 30 percent of the deposit
market on Staten Island, effectively saturating the Staten Island market.
Although the Bank maintains deposit relationships with customers outside of
Staten Island, primarily in the Bay Ridge branch, approximately 98 percent of
the Bank's deposits are contained in the Staten Island offices. A
community-oriented thrift, the Bank considers its primary deposit market to
consist of Staten Island (Richmond County) and the Bay Ridge area of Brooklyn
(Kings County). The Bank's CRA assessment area includes Richmond County and
Bay Ridge, Brooklyn, although the majority of the Bank's lending activity
occurs on Staten Island. The Bank lends in an expanded geographic area, which
includes other areas of Brooklyn and northern New Jersey.
The greater New York area represents one of the world's largest money
centers. The Bank is one of several hundred financial institutions operating
in New York City and northern New Jersey, a number of which are significantly
larger than the Bank in terms of deposits, scope of operations, and number of
branches, and have greater resources at their disposal. In addition, a large
number of smaller institutions operate in the local New York City neighborhoods
and provide significant competition as these institutions serve specific market
niches, including specific ethnic, immigrant or language groups. Competition
for both loans and deposits has increased over the last several years as the
local economy has gradually recovered and the
<PAGE> 35
RP Financial, LC.
Page 2.2
financial and capital position of local financial institutions has
strengthened. Given the intensity of competition, community institutions such
as the Bank have pursued niche strategies to remain viable and grow. The New
York MSA has also undergone a certain amount of consolidation in the banking
industry in recent years, which has assisted financial institutions emphasizing
a community orientation (such as the Bank).
The following sections analyze the market area's historical and
forecasted demographic growth trends, economy and competitive environment to
help determine the growth potential and opportunities that exist for the Bank.
National Economy
Economic Trends
Over the past year, the national economy has continued to grow,
although concerns remain about the threat of inflation and the potential for
higher interest rates. Inflation became a major concern in April 1996 due to a
stronger than expected March 1996 employment report and higher oil and
commodity prices, but various other economic indicators, including low wages,
suggested the economic growth rate was under control and the risk of inflation
was moderate. Lower than expected unemployment data in May and June of 1996
pushed interest rates higher, but the anxiety in the bond market was alleviated
by more moderate growth in consumer and producer prices.
The economic momentum carried over to the third quarter of 1996,
although by mid-July the Federal Reserve Chairman signaled expectations of an
economic slowdown in the second half of 1996. Much of the economic data
released during July and August 1996 indicated a continuation of fairly robust
economic growth, including a stronger than expected increase in July durable
goods orders, a six year high in the consumer confidence index and a decline in
the August 1996 unemployment rate. However, this growth data was offset by a
decline in August 1996 durable goods orders, a smaller than expected increase
in August retail sales and consumer prices, and a slight increase in the
September 1996 unemployment rate, all of which suggested that the economy was
cooling off.
<PAGE> 36
RP Financial, LC.
Page 2.3
Economic data released at the beginning of the fourth quarter 1996
confirmed the national economic slowdown. The October 1996 unemployment rate
remained at 5.2 percent, although the number of new jobs added to the economy
was low compared to job growth recorded during late-spring and summer 1996.
Third quarter 1996 GDP growth fell to a 2.2 percent annual rate, versus a
comparative 4.7 percent rate in the prior quarter. Wage data indicated that
inflation was under control. Overall, most of the economic data released at
the close of 1996 suggested that the economy was sluggish and non-inflationary.
While fourth quarter 1996 GDP growth was stronger than expected at 3.9
percent, economic data released early in the first quarter of 1997 indicated a
continuation of moderate economic growth. Although this data included an
increase in the January 1997 unemployment rate to 5.4 percent versus 5.3
percent in December 1996, the increase was attributed to expansion in the labor
force. In fact, some markets were experiencing labor shortages. In
congressional testimony at the end of February 1997, the Federal Reserve
Chairman anticipated that signs of strengthened job security among the labor
force would lead to upward wage pressures, which could trigger a boost in
interest rates. Signs of inflation became more notable during March and April
1997, with most economic indicators posting month-to-month increases from
January to February 1997. For example, industrial production increased 0.5
percent, housing starts rose 12.2 percent and existing home sales jumped 9.0
percent during February 1997. In March 1997, the unemployment rate dropped to
5.2 percent from 5.3 percent in February, and the "core" producer price index
posted its largest increase in 18 months. March economic data revealed a
continuation of growth trends, including increases in retail sales, industrial
production, and personal spending. However, inflation measures showed that the
"Goldilocks Economy" remained in effect, based on lower producer prices and a
lower than expected increase in the employment cost index. Some of the reasons
cited for the low inflation were a larger labor force, a measurable increase in
productivity, and an increasingly global economy. First quarter 1997 GDP
growth was measured at 5.9 percent, far exceeding analysts' projections.
Second quarter economic data began to show signs of economic
weakening, based on a number of indicators. A lower than anticipated National
Association of Purchasing Managers index in April indicated a slowdown of
expansion in the manufacturing sector. New home sales also dropped by 7.7
percent in April 1997, the sharpest decline in six months. Automobile sales
<PAGE> 37
RP Financial, LC.
Page 2.4
for April and May 1997 declined from year-earlier levels, and discounting and
other sales efforts became more common by automakers. The average workweek
declined, alleviating fears of inflation. Producer prices fell for the fourth
month in a row in April. Although economic data for May and preliminary June
data revealed continued strength in the economy, second quarter GDP growth is
widely anticipated to be much lower than the first quarter growth.
Interest Rate Trends
Consistent with recent economic activity, interest rate trends have
been varied over the past 12 months. Generally improving economic conditions
and fears of inflation started an upward trend in long-term interest rates
during the first quarter of 1996. Interest rates continued to edge higher
during the second quarter of 1996. The 30-year U.S. Government bond ("long
bond") yield climbed above 7.0 percent early in June 1996 following the much
stronger than expected job growth in May. Another report of low unemployment
in June sent long bond prices tumbling again in early July, causing the yield
to spike upward from 6.93 to 7.18 percent in one day, one of the largest
changes ever. After trending lower for a brief period during early and mid
August 1996, interest rates moved higher in late August and early September
1996 as inflation concerns rose with stronger than expected economic growth.
Interest rates fell through the remainder of September and through
October on reduced fears of inflation and a decision by the Federal Open Market
Committee ("FOMC") not to raise interest rates at its September and October
1996 meetings. Interest rates continued to fall through November 1996 on
non-threatening October economic data. The long bond yield began to rise in
early December 1996, as investors focused on weakness in the dollar, rising oil
prices, and concern over a slowdown in Japanese investment in U.S. bonds.
However, continued benign inflation data allowed the Federal Reserve to leave
interest rates unchanged at its December 1996 FOMC meeting.
Low inflation kept bond yields down in the beginning of 1997. Rates
dropped further during the first half of February 1997 on indications of
slowing economic growth and the Federal Reserve's decision to leave rates
unchanged at its FOMC meeting in early February 1997. Rates moved higher
later in February 1997 following renewed concerns by the Federal Reserve
Chairman over the sharp rise in the stock market during the past two years.
After stabilizing
<PAGE> 38
RP Financial, LC.
Page 2.5
briefly, the strengthening economy and growing expectations of a rate increase
by the Federal Reserve propelled interest rates higher again in late March
1997.
The Federal Reserve increased short-term interest rates by 0.25
percent in late-March 1997, which triggered a sharp sell-off in the bond
market. For the first time in six months, the rate on the 30-year benchmark
bond moved above 7.0 percent in late March 1997. Rates fluctuated in the first
part of April as inflation concerns were offset by rumors of a national budget
accord. Interest rates jumped in mid April on news of an increase in March
retail sales and upward revisions to January and February retail sales data,
but fell the following week on reports that consumer prices rose by only 0.1
percent in March. Rates fell below 7.0 percent in early May on the lower than
expected employment cost index for the first quarter and news of a budget
agreement in Congress. The long bond yield stayed between 6.9 percent and 7.0
percent through the middle of May, but rose above 7.0 percent at the end of the
month with the release of the strongest consumer confidence index in 27 years.
The increase was short-lived as the yield dropped to 6.8 percent in early June
on rumors of large purchases of U.S. Treasury bonds by central banks and hedge
funds. News of slowing economic growth kept pushing interest rates lower
through the remainder of June and the beginning of July 1997, which again
allowed the Fed to bypass a rise in interest rates at the July 2 FOMC meeting.
The most recent change to bond prices occurred with news that June unemployment
rose modestly to 5.0 percent. As of July 17, 1997, the one- and thirty-year
U.S. Government bonds were yielding 5.49 percent and 6.49 percent,
respectively. Exhibit II-2 displays interest rate trends for the past several
years.
Market Area Demographics
Demographic trends in the Bank's market are an important indicator of
future growth potential. The following sections evaluate several key
demographic factors impacting the Bank, including trends in population,
households, income, age distribution and housing permit data for the primary
market areas (see Exhibit II-3). Presented are figures for the U.S., the State
of New York, the New York MSA, the Bank's primary markets of Richmond County
and Kings County, and the individual zip codes in which the Bank operates. In
general, the Bank serves the populations of Staten Island and Bay Ridge,
reflecting a mix of income levels and employment.
<PAGE> 39
RP Financial, LC.
Page 2.6
The Bank believes it serves virtually all income and employment groups in these
areas, exemplifying the Bank's mission to serve all residents in the local
community.
Similar to demographic trends experienced in many of the large urban
areas in the Northeast, growth of total population and households in the Bank's
markets has been and is projected to be below national averages since 1980 (see
Exhibit II-3 and the summary in Table 2.1 below). Richmond County has better
trends than the New York region in general, but this is partially attributable
to the smaller base as well. In contrast, the Bay Ridge area as well as all of
Brooklyn has shown population shrinkage. Thus, the population trends for the
Bank's primary market area are mixed, as Kings County has exhibited unfavorable
growth characteristics while Richmond County's growth characteristics are
favorable. Table 2.1 displays summary population and growth statistics for the
counties containing a branch of the Bank and the broader New York market.
Table 2.1
Selected Demographic Data
Projected 1997-2002
<TABLE>
<CAPTION>
Annual Annual
1997 Population Household
Population Growth Growth
County Estimate 1997-2002 1997-2002
------ -------- --------- ---------
(000) (%) (%)
<S> <C> <C> <C>
United States 267,805 1.0% 1.0%
State of New York 18,191 0.2% 0.1%
New York MSA 8,659 0.2% 0.1%
PRIMARY MARKET AREA COUNTIES
----------------------------
Richmond County (Staten Island) 400 0.8% 0.7%
Kings County (Brooklyn) 2,268 -0.2% -0.3%
Bay Ridge: Zip Code 11209 60 -0.4% -0.5%
SECONDARY MARKET AREA COUNTIES
-------------------------------
New York County (Manhattan) 1,544 0.5% 0.5%
Queens County (Queens) 1,987 0.2% 0.2%
Bronx County (Bronx) 1,192 -0.1% -0.2%
</TABLE>
Source: CACI Marketing Systems, 1997.
<PAGE> 40
RP Financial, LC.
Page 2.7
These population trends are projected to continue over the next five
years through 2002. The population and household trends in the primary market
area represent a continuation of a longer-term course prompted by many forces,
including the already dense population and relatively high cost of living in
the New York metropolitan area. Although the population and number of
households are experiencing little to no growth, it is believed such factors
are partially mitigated by the population density (the MSA counties have in
excess of 8.6 million residents) which provides ample lending opportunities and
a huge pool of available deposit funds. At the same time, competition for such
funds is very intense and the population mix is undergoing a radical change
particularly in Kings and Queens Counties.
Median household and per capita income levels in the primary market
area reflect the distinct socioeconomic markets served by the Bank. The Bank's
Richmond County operations are conducted in an area that has the second highest
median income level of all counties in the New York MSA, while the Kings County
market is at the lower end of the scale. The Bank serves a broad market
spectrum of the population ranging from relatively affluent white collar
professionals in Richmond County to a generally more blue collar and/or ethnic
customer base in the more urban and more densely populated markets of Bay
Ridge, with Bay Ridge demonstrating a greater minority and ethnic mix. In line
with projected national trends, all market area counties examined are expected
to record increasing levels of household income over the next five years.
<PAGE> 41
RP Financial, LC.
Page 2.8
Table 2.2
Median Household Income Trends
Projected 1997-2002
<TABLE>
<CAPTION>
Median 1997-2002
Household Income % of MSA Percent
County 1997 2002 Avg. 1997 Inc/(Dec)
------ ---- ---- --------- ---------
($) ($) (%) (%)
<S> <C> <C> <C> <C>
United States $36,961 $42,042 101.27% 13.75%
State of New York 36,341 38,815 100.12% 6.81%
New York MSA 36,298 39,559 100.00% 8.98%
PRIMARY MARKET AREA COUNTIES
----------------------------
Richmond County (Staten Island) $46,775 $51,385 128.86% 9.86%
Kings County (Brooklyn) 29,778 34,472 82.03% 15.76%
Zip Code 11209 (Bay Ridge) 38,064 42,994 104.86% 12.95%
SECONDARY MARKET AREA COUNTIES
------------------------------
New York County (Manhattan) 37,272 38,207 102.68% 2.51%
Queens County (Queens) 38,332 42,693 105.60% 11.38%
Bronx County (Bronx) 25,969 29,385 71.54% 13.15%
</TABLE>
Source: CACI Marketing Systems, 1997.
Table 2.3 presents various demographic and economic data regarding the
counties in which the Bank operates and other surrounding counties. The data
further highlights the dichotomy between the Bank's Richmond and Kings Counties
markets, which are the least and most racially diverse of the New York City
boroughs, respectively. All New York markets have experienced a shift in mix
with strong immigration trends the last several years, however Richmond
County's trend has lagged.
<PAGE> 42
RP Financial, LC.
Page 2.9
Table 2.3
Market Area County Demographic/Economic Data
<TABLE>
<CAPTION>
Racial Mix
----------------------------------------------
Asian/
County White Black Pacific Hispanic
------ ----- ----- ------- --------
<S> <C> <C> <C> <C>
Richmond 81.4% 9.1% 6.4% 10.8%
Kings 43.0 38.4 6.0 24.9
New York 52.6 23.6 9.2 32.2
Queens 53.0 22.0 15.4 23.7
Bronx 33.3 35.7 3.2 49.9
</TABLE>
Source: CACI Marketing Systems.
Market Area Economy
According to the Federal Reserve Bank of New York, the economy of New
York City has improved since the recession of the early 1990s, although job
growth has been more moderate than the national averages. Overall, commercial
and residential real estate values in these areas have generally stabilized.
The past causes of the economic downturn in the primary market area can be
attributed to various economic trends that developed in the market area during
the 1980s. Specifically, during the boom years of the 1980s, the New York
metropolitan area led the nation in job growth. Of the 400,000 new jobs
created in the local area between 1977 and 1987, approximately one third were
in the financial and real estate ("FIRE") sector. The rapid growth in the FIRE
sector fueled employment growth in other areas of the economy, particularly
business services catering to the financial sector and retail trade. At the
same time, manufacturing employment declined and there were a high level of
corporate relocations, owing in part to the high cost of labor and office space
in New York City. A side effect of the rapid employment gains in the
relatively high-paying FIRE sector was explosive growth in real estate, both in
terms of construction and values. Home prices, rental rates, and construction
costs rose at rates far exceeding the national average for the corresponding
time period. When the stock market crashed in October 1987, FIRE employment
fell sharply, eventually triggering declines in services, retail trade, and
construction employment. While the New York recession was
<PAGE> 43
RP Financial, LC.
Page 2.10
originally a regional phenomenon, the national recession that began in early
1990 exacerbated the region's economic problems.
Economic stability and moderate economic growth have returned to the
New York area over the past several years, with most of the growth occurring in
sectors such as services and government. Wall Street is also experiencing
relative prosperity once again, contributing to growth in the FIRE sector. The
growth of these employment sectors has been replacing manufacturing employment,
which is more a reflection of the national trend than an indication of weakness
unique to New York. Exhibit II-3 presents income and employment trends for the
Bank's primary market area, other counties, and for the state of New York for
the most recent available six year period. The data shows that while total
personal income levels have continued to rise in all areas examined, total
employment in Richmond County and Kings County have grown slowly. Within
employment sectors, most of the growth occurred in the services industries,
replacing losses in other key sectors such as manufacturing and government.
Additional data provided in Exhibit II-3 reveals trends in per capita income
and other employment and earnings data for the Bank's market area counties and
other surrounding counties. In summary, the data shows that per capita income
and personal income has risen in all areas.
Table 2.4 displays unemployment trends for the markets served by the
Bank and the other boroughs of New York City. The unemployment rates in New
York City are traditionally higher than the surrounding suburbs and reflect an
increase relative to the rate reported as of the previous year. Richmond
County recorded unemployment rates slightly lower than MSA averages, while
Kings County's unemployment rate was above MSA averages.
<PAGE> 44
RP Financial, LC.
Page 2.11
Table 2.4
Staten Island Savings Bank
Market Area Unemployment Trends
<TABLE>
<CAPTION>
April 1996 April 1997
Region Unemployment Unemployment
------ ------------ ------------
<S> <C> <C>
United States 5.4% 4.8%
New York State 6.3% 6.2%
New York MSA 7.9% 8.6%
Richmond County 7.8% 8.4%
Kings County 10.2% 11.1%
New York County 6.7% 7.8%
Queens County 8.3% 9.0%
Bronx County 10.0% 11.8%
</TABLE>
Source: U.S. Bureau of Labor Statistics.
Market Area Deposit Characteristics and Competition
Table 2.5 displays regional branch deposit market trends by county
from June 30, 1994 to June 30, 1996 (latest data available). The New York MSA
is a domestic and international hub for financial services, and has more
financial institution headquarters and branches than any other region in the
United States. The Bank has established a strong deposit presence in Richmond
County by operating 23 percent of the total number of branches which contain 30
percent of total county deposits. Due to the Bank's saturation of the Richmond
County market, however, future expansion opportunities on Staten Island are
expected to be limited. Deposit competition is more intense in Kings County
where there are nearly four times the number of branches as in Richmond County.
Nevertheless, the Bank has been successful in attracting new deposits at the
Bay Ridge office.
Richmond County has the smallest deposit base among the five New York
City boroughs, but experienced one of the most rapid deposit growth rates
between June 1994 and June 1996. Importantly, most of the deposit growth in
Richmond County was experienced by savings banks, including the Bank,
reflecting the impact of big bank consolidation and the Bank's acquisition of
<PAGE> 45
RP Financial, LC.
Page 2.12
TABLE 2.5
STATEN ISLAND SAVINGS BANK
DEPOSIT SUMMARY
<TABLE>
<CAPTION>
As of June 30,
---------------------------------------------------------------------------
1994 1996 Annualized
----------------------------------- -------------------------------------- Deposit
Market # of Market # of Growth Rate
Deposits Share Branches Deposits Share Branches 1994-1996
-------- ----- -------- -------- ----- -------- ---------
(Dollars in Thousands) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
State of New York $353,700,121 100.0% 4,847 $360,630,139 100.0% 4,725 1.0%
Commercial Banks 252,899,437 71.5% 3,646 271,012,870 75.1% 3,640 3.5%
Savings Banks 68,380,593 19.3% 684 64,058,570 17.8% 675 -3.2%
Savings Institutions 32,420,091 9.2% 517 25,558,699 7.1% 410 -11.2%
PRIMARY MARKET AREA
- -------------------
Richmond County (Staten Island) $ 5,000,243 100.0% 78 $ 5,171,062 100.0% 70 1.7%
Commercial Banks 1,715,014 34.3% 30 1,646,863 31.8% 21 -2.0%
Savings Banks 2,657,695 53.2% 42 3,444,465 66.6% 47 13.8%
Savings Institutions 627,534 12.6% 6 79,734 1.5% 2 -64.4%
Staten Island SB 1,256,984 25.1% 14 1,549,879 30.0% 16 11.0%
Kings County (Brooklyn) $ 24,936,466 100.0% 275 $ 25,018,877 100.0% 254 0.2%
Commercial Banks 8,947,927 35.9% 144 11,508,999 46.0% 145 13.4%
Savings Banks 12,685,670 50.9% 84 12,177,798 48.7% 83 -2.0%
Savings Institutions 3,302,869 13.2% 47 1,332,180 5.3% 26 -36.5%
Staten Island SB -- -- -- 32,552 0.1% 1 N/M
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL OF TWO-COUNTY AREA $ 29,936,709 353 $ 30,189,939 324 0.4%
STATEN ISLAND SB (TOTAL) $ 1,256,984 14 $ 1,582,431 17 12.2%
- ------------------------------------------------------------------------------------------------------------------------------------
SECONDARY MARKET AREA
- ---------------------
Queens County (Queens) $ 27,114,934 100.0% 356 $ 27,731,115 100.0% 338 1.1%
Commercial Banks 10,400,415 38.4% 201 12,042,342 43.4% 197 7.6%
Savings Banks 9,777,874 36.1% 85 9,259,768 33.4% 81 -2.7%
Savings Institutions 6,936,645 25.6% 70 6,429,005 23.2% 60 -3.7%
Bronx County $ 8,784,823 100.0% 119 $ 9,012,262 100.0% 115 1.3%
Commercial Banks 5,414,493 61.6% 86 5,692,640 63.2% 81 2.5%
Savings Banks 2,377,306 27.1% 17 2,395,694 26.6% 19 0.4%
Savings Institutions 993,024 11.3% 16 923,928 10.3% 15 -3.5%
New York County (Manhattan) $137,817,124 100.0% 607 $142,434,725 100.0% 553 1.7%
Commercial Banks 125,140,753 90.8% 505 133,166,248 93.5% 479 3.2%
Savings Banks 10,758,500 7.8% 70 8,214,755 5.8% 54 -12.6%
Savings Institutions 1,917,871 1.4 32 1,053,722 0.7% 20 -25.9%
</TABLE>
Source: FDIC, OTS. Excludes credit unions.
<PAGE> 46
RP Financial, LC.
Page 2.13
Gateway. Richmond County was the only county among the five boroughs where
branch deposit growth at savings institutions outpaced commercial banks.
Kings County, in contrast, has the slowest growth deposit market among
the five boroughs, in part reflecting the population shrinkage. The deposit
growth that did occur in Kings County was within the commercial banks at the
expense of savings institutions, who lost deposit market share.
Competition among financial institutions in the counties in which the
Bank operates is fierce. As larger institutions compete for market share (in
slow growth deposit markets) to achieve economies of scale, the market
environment for the Bank's products and services is expected to become
increasingly competitive in the future. Smaller institutions will be forced to
either compete with larger institutions on pricing, or to identify and
successfully operate in a "niche" that will allow for operating margins to be
maintained at profitable levels. The Bank's long tenure on Staten Island and
reputation for excellent service to Staten Island residents has resulted in
strong customer loyalty and contributed to the strong deposit market share the
Bank currently enjoys. However, the deposit growth and other generally
favorable demographic characteristics of Richmond County have begun to attract
the attention of institutions from other areas in New York City, including new
market entrants following acquisition, many of whom are much larger than the
Bank and offer more products and services. Thus, going forward the Bank will
be forced to rely on more than its branch network to attract and retain
deposits. The proceeds received from the stock conversion will enhance the
flexibility of the Bank to react to the increasing competition on Staten
Island, enable the Bank to become more aggressive on pricing and services in
its Bay Ridge market, and realistically consider the possibility for expansion
into new markets.
* * * * * * * * * *
The Bank's market area contains a diverse economy, a large number of
employers, and a large number of potential customers. The demographics of the
Bank's immediate markets is mixed, with moderate to slow growth (or declines)
and unemployment levels that are both higher and lower than state and national
averages. The Bank's historical operating concentration on Staten Island has
given it somewhat of a strategic advantage in residential lending and deposit
<PAGE> 47
RP Financial, LC.
Page 2.14
market share in this market. Overall, while the Staten Island demographic
trends are somewhat more favorable than trends in Kings County and the other
counties contained in New York City, the Bank has effectively saturated the
market in terms of branching on Staten Island and is facing increasing
competition for loans and deposits, which over time can be expected to erode
spreads and market share.
<PAGE> 48
RP Financial, LC.
Page 3.1
III. PEER GROUP ANALYSIS
This chapter presents an analysis of SISB's operations versus a group
of comparable savings institutions (the "Peer Group") selected from the
universe of all publicly-traded savings institutions in a manner consistent
with the regulatory valuation guidelines. The basis of the pro forma market
valuation of SISB is derived from the pricing ratios of the Peer Group
institutions, incorporating valuation adjustments for key differences in
relation to the Peer Group. Since no Peer Group can be exactly comparable to
SISB, key areas examined for differences are: financial condition;
profitability, growth and viability of earnings; assets growth; primary market
area; dividends; liquidity of the shares; marketing of the issue; management;
and effect of government regulations and regulatory reform.
Selection of Peer Group
The Peer Group selection process is governed by the general parameters
set forth in the regulatory valuation guidelines. Accordingly, the Peer Group
is comprised of only those publicly-traded savings institutions whose common
stock is either listed on a national exchange (NYSE or AMEX), or is NASDAQ
listed, since the stock trading activity is regularly reported and generally
more frequent than non-publicly traded and closely-held institutions.
Non-listed institutions are inappropriate since the trading activity for
thinly-traded or closely-held stocks is typically highly irregular in terms of
frequency and price and thus may not be a reliable indicator of market value.
We have also excluded from the Peer Group those companies under acquisition or
subject to rumored acquisition, mutual holding companies and recent
conversions, since their pricing ratios are subject to unusual distortion
and/or have limited trading history. A recent listing of the universe of all
publicly-traded savings institutions is included as Exhibit III-1.
Ideally, the Peer Group, which must have at least 10 members to comply
with the regulatory valuation guidelines, should be comprised of locally or
regionally-based institutions with comparable resources, strategies and
financial characteristics. Since there are only just over 400 publicly-traded
institutions nationally, it is typically the case that the Peer Group will be
comprised of institutions with relatively comparable characteristics. To the
extent that
<PAGE> 49
RP Financial, LC.
Page 3.2
differences exist between the converting institution and the Peer Group,
valuation adjustments will be applied to account for the differences.
In deriving the Bank's Peer Group, RP Financial's selection criteria
initially focused on selecting comparable institutions based in New York.
(Exhibit III-2 presents financial and other information regarding the universe
of all publicly-traded New York institutions). While there are 32
publicly-traded thrifts in New York, a number were not comparable and were
excluded from consideration. A total of 13 institutions were excluded in the
first cut as follows: 1 was in mutual holding company form, 2 were subject to
acquisition (Greater New York Savings Bank and RCSB Financial, Inc.), and 10
were relatively small (under $300 million in assets). The institutions under
$300 million in assets were excluded due to their low market capitalization and
lower stock liquidity, more limited resources and market coverage (certain of
these institutions only had one or two offices) and more limited capacity for
growth and diversification.
Of the 19 remaining New York thrifts, 10 were excluded for reasons
described below (the identity of the nine New York thrifts selected for the
Peer Group are also described below). Long Island Bancorp was excluded as we
believe, based on a review of several stock analyst reports, that the stock
price reflects speculation of up to a $500 million potential windfall from
pending litigation against the U.S. Government relating to supervisory goodwill
(which may approximate as much as 57 percent of current book value per share on
an after-tax basis). Astoria Financial Corporation, despite certain market and
operating similarities, was excluded due to (a) its pending $250 million plus
supervisory goodwill claim (which may approximate as much as 34 percent of
current tangible book value per share on an after-tax basis); and (b) the
recently announced acquisition of Greater New York Savings Bank, a transaction
representing 35 percent of Astoria's assets -- thus, while the stock price may
reflect potential supervisory goodwill recovery and the large cash and stock
acquisition, the balance sheet, income statement and per share impact remains
unknown at this time. We excluded the two largest of the remaining
institutions, GreenPoint Financial and Dime Bancorp, $13.3 and 18.5 billion in
assets, respectively, because of their very large scale and uniqueness of
operations (GreenPoint specializes in limited documentation residential lending
and nationwide retail mortgage banking; Dime is highly diversified with a heavy
mortgage banking and consumer lending emphasis and also has a large supervisory
goodwill claim based on an original supervisory goodwill balance
<PAGE> 50
RP Financial, LC.
Page 3.3
exceeding $650 million, representing nearly 40 percent of current tangible book
value per share on an after-tax basis). Roslyn Bancorp was excluded since it
only recently completed its conversion (in early 1997) and thus lacks seasoning
and reporting history as a public company and has not invested its conversion
proceeds for a full year. New York Bancorp was excluded due to its highly
leveraged position and resulting high return on equity ("ROE"), which was
nearly twice the highest ROE of the Peer Group members, a factor distinctly
reflected in its pricing ratios. Ambanc Holding Company, with less than $500
million in assets, was excluded due to its low profitability historically and
operating loss for the trailing 12 month period. Carver Bancorp, Inc., with
less than $400 million in assets, was excluded due to its low historical and
current profitability, very limited loan origination activity and stockholder
securities litigation regarding the closing value in the initial public
offering. MSB Bancorp was excluded due to its historically low to moderate
profitability, relatively low market capitalization and high leveraged tangible
equity position following branch purchases which doubled its size during the
past year. Finally, Poughkeepsie Bank, Inc. was excluded due to its
historically low-to-moderate core profitability.
Recognizing the Bank's intention to expand into New Jersey, in-state
institutions meeting the following criteria were also selected for the Peer
Group: well-capitalized New Jersey thrifts (excluding the four in mutual
holding company form and two subject to acquisition) with assets over $500
million and core profitability over 0.50 percent of average assets (Exhibit
III-3 presents financial and other information regarding the universe of all
publicly-traded New Jersey institutions). Such criteria led to the selection
of seven New Jersey Peer Group members.
This selection process led to a Peer Group comprised of 16
institutions. Table 3.1 shows the general characteristics of each of the 16
Peer Group companies and Exhibit III-4 provides summary demographic and deposit
market share data for the primary market areas served by each of the Peer Group
companies. Twelve of the Peer Group companies have completed their stock
conversions in the 1990s.
While there are expectedly some differences between the Peer Group
companies and SISB, we believe that the Peer Group companies, on average,
provide a good basis for valuation subject to valuation adjustments. The
following sections present a comparison of SISB's financial condition, income
and expense trends, loan composition, interest rate and credit risk
<PAGE> 51
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.1
Peer Group of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ -------
($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALBK ALBANK Fin. Corp. of Albany NY OTC Upstate NY, MA Thrift 3,496 71 06-30 04/92 38.62 495
ROSE T R Financial Corp. of NY (3) OTC New York City NY Thrift 3,404 15 12-31 06/93 23.87 421
RELY Reliance Bancorp, Inc. of NY OTC New York City NY Thrift 1,927 28 06-30 03/94 28.75 254
HAVN Haven Bancorp of Woodhaven NY OTC New York City NY Thrift 1,728 20 12-31 09/93 37.25 161
JSBF JSB Financial, Inc. of NY OTC New York City NY Thrift 1,531 13 12-31 06/90 44.00 433
OCFC Ocean Fin. Corp. of NJ OTC Eastern NJ Thrift 1,388 10 12-31 07/96 34.75 315
QCSB Queens County Bancorp of NY (3) OTC New York City NY Thrift 1,373 13 12-31 11/93 48.75 543
PFSB PennFed Fin. Services of NJ OTC Northern NJ Thrift 1,252 17 06-30 07/94 27.25 131
DIME Dime Community Bancorp of NY OTC New York City NY Thrift 1,237 15 06-30 06/96 19.25 253
PSBK Progressive Bank, Inc. of NY (3) OTC Southeast NY Thrift 878 17 12-31 08/84 29.75 114
FFIC Flushing Fin. Corp. of NY (3) OTC New York City NY Thrift 811 7 12-31 11/95 20.25 164
IBSF IBS Financial Corp. of NJ OTC Southwest NJ Thrift 740 10 09-30 10/94 18.25 201
SFIN Statewide Fin. Corp. of NJ OTC Northern NJ Thrift 677 16 03-31 10/95 18.37 88
FMCO FMS Financial Corp. of NJ OTC Southern NJ Thrift 554 18 12-31 12/88 28.50 68
PULS Pulse Bancorp of S. River NJ OTC Central NJ Thrift 516 4 09-30 09/86 20.37 62
FSPG First Home Bancorp of NJ OTC NJ,DE Thrift 508 10 12-31 04/87 20.12 54
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift,
M.B.=Mortgage Banker, R.E.=Real Estate Developer,
Div.=Diversified, and Ret.=Retail Banking.
(3) FDIC savings bank institution.
Source: Corporate offering circulars, data derived from information
published in SNL Securities Quarterly Thrift Report, and financial
reports of publicly-traded thrifts.
Date of Last Update: 07/21/97
<PAGE> 52
RP Financial, LC.
Page 3.5
versus the Peer Group as of the most recent publicly available date. A brief
introduction to each Peer Group member appears below, ordered by descending
asset size.
ALBANK Financial Corporation of Albany, NY. ALBANK, with $3.5 billion in
assets and 71 branch offices in upstate New York and, to a lesser extent,
New England, was selected due to its comparable asset size and regional
market area. ALBANK has grown through a series of acquisitions, resulting
in relatively large balance of intangible assets. ALBANK is primarily a
residential lender, and has built a portfolio of residential loans serviced
for others, but is emphasizing loan diversification. Approximately 47
percent of ALBANK's deposits are in core deposits.
TR Financial Corp. of Garden City, NY. TR Financial, with $3.4 billion in
assets and 15 branch offices, was selected due to comparable size and
general location. TR Financial maintains a focus on 1-4 family residential
lending, given its relative suburban location. Approximately 31 percent of
TR Financial's deposits are in core deposits. TR Financial has utilized
borrowings to a large extent to fund investment activity.
Reliance Bancorp, Inc. of Garden City, NY. Reliance Bancorp, with $1.9
billion in assets and 28 branch offices, was selected due to comparable size
and general location. Reliance has grown through cash acquisitions,
creating a relatively large balance of intangible assets. Reliance is
primarily a 1-4 family residential lender, given its relative suburban
location, and has built a relatively large portfolio of loans serviced for
others. Approximately 48 percent of Reliance's deposits are in core
deposits. Reliance is currently in the process of acquiring Continental
Bank ($173 million in assets) for cash and stock.
Haven Bancorp of Woodhaven, NY. Haven Bancorp, with $1.7 billion in assets
and 20 branch offices, was selected due to comparable size and similar
market area. Haven is primarily a residential lender with an emphasis on
multi-family lending, given the nature of its immediate market area. Haven
has also been active in selling loans and has built a relatively large
portfolio of loans serviced for others. Approximately 47 percent of Haven's
deposits are in core deposits. Haven has utilized borrowings to a large
extent to fund investment activity.
JSB Financial, Inc. of Lynbrook, NY. JSB Financial, with $1.5 billion in
assets and 13 offices, was selected due to size and similar market area.
JSB is primarily a multi-family lender for portfolio, given the nature of
its immediate market area. Approximately 66 percent of JSB's deposits are
in core deposits.
Ocean Financial Corp. of Toms River, NJ. Ocean, with $1.4 billion in assets
and 10 offices, was the largest Peer Group member located outside of the New
York MSA. Ocean serves markets on the coast of New Jersey primarily as a
single-family residential lender, and was selected due to similar size and
similar financial characteristics. Ocean's conversion to stock form in July
1996 included the formation of a charitable foundation, a
<PAGE> 53
RP Financial, LC.
Page 3.6
characteristic that the Bank will share on a pro forma basis. Such
contribution led to Ocean's operating loss for the last 12 months.
Approximately 34 percent of Ocean's deposits are in core deposits.
Queens County Bancorp of Flushing, NY. Queens County, with $1.4 billion in
assets and 13 offices, was selected due to size and similar market area.
Queens County is primarily a multi-family lender for portfolio, given the
nature of its immediate market area. Approximately 36 percent of Queens
County's deposits are in core deposits.
PennFed Financial Services, Inc. of West Orange, NJ. PennFed, with $1.3
billion in assets and 17 offices, was selected due to size and similar
market area in northern New Jersey. PennFed is primarily a 1-4 family
residential lender, given its relative suburban location. Approximately 31
percent of PennFed's deposits are in core deposits. PennFed has increased
its utilization of borrowings to support funding of loan growth.
Dime Community Bancorp, Inc. of Brooklyn, NY. Dime Community, with $1.2
billion in assets and 15 offices, was selected due to size and similar
market area. Dime Community has grown through cash acquisitions, creating
relatively large intangible assets. Dime Community is primarily a
residential lender for portfolio, with particular emphasis in multi-family
lending given the nature of its immediate market area. Approximately 48
percent of Dime Community's deposits are in core deposits.
Progressive Bank, Inc. of Fishkill, NY. Progressive, with $0.9 billion in
assets and 17 branches, was selected due to size and general location.
Progressive has grown through acquisitions accounted for as a purchase.
Progressive is primarily a residential lender, with an emphasis in 1-4
family construction and custom homes lending as well as multi-family
lending. Approximately 53 percent of Progressive's deposits are in core
deposits.
Flushing Financial Corp. of Flushing, NY. Flushing, with $0.8 billion in
assets and 7 branches, was selected due to size and similar market area.
Flushing is primarily a residential lender, with an emphasis in multi-family
lending given the nature of its immediate market area. Approximately 46
percent of Flushing's deposits are in core deposits. Flushing is currently
in the process of acquiring New York Federal Savings Bank ($80 million in
assets) for cash.
IBS Financial Corp. of Cherry Hill, NJ. IBS, with $0.7 billion in assets
and 10 branches, was selected due to size and similar market area
characteristics of the Philadelphia MSA. IBS has a highly liquid asset
base, including a large portfolio of MBS. IBS' lending is primarily
single-family residential in nature. Approximately 27 percent of IBS'
deposits are in core deposits.
Statewide Financial Corp. of Jersey City, NJ. Statewide, with $0.7 billion
in assets and 16 branches, was selected due to size and similar market area
in northern New Jersey. Statewide is primarily a residential lender for
portfolio. Statewide maintains a relatively
<PAGE> 54
RP Financial, LC.
Page 3.7
high proportion of borrowings as part of a leverage strategy to improve ROE.
Approximately 54 percent of Statewide's deposits are in core deposits.
FMS Financial Corp. of Burlington, NJ. FMS, with $0.5 billion in assets and
18 branches, was selected due to size and similar market area
characteristics. FMS maintains a high concentration of interest-earning
assets in investments, including MBS. FMS' lending emphasis is originating
1-4 family loans for portfolio. Approximately 47 percent of FMS' deposits
are in core deposits.
Pulse Bancorp, Inc. of South River, NJ. Pulse, with $0.5 billion in assets
and 4 branches, was selected due to size and similar market area
characteristics. Pulse has a highly liquid asset base that includes a large
portfolio of MBS. Pulse's lending is primarily residential in nature, which
includes diversification into multi-family lending. Growth in investments
has been primarily funded by borrowings. Approximately 36 percent of
Pulse's deposits are in core deposits.
First Home Bancorp, Inc. of Pennsville, NJ. First Home, with $0.5 billion
in assets and 10 branches, was selected due to size and similar market area
characteristics. First Home is primarily a 1-4 family lender, although
interest-earning assets reflect a relatively high concentration of
investments. Borrowings represent a notable portion of First Home's funding
composition. Approximately 43 percent of First Home's deposits are in core
deposits.
In the aggregate, the Peer Group companies are less highly capitalized
than the industry average, but more profitable on a core basis, resulting in a
higher core return on equity ratio. Overall, the Peer Group's pricing ratios
are: higher than average in terms of reported and tangible book value ratio;
lower on an earnings multiple basis; and comparable on an assets ratio basis,
relative to New York and all publicly-traded thrifts, as summarized below.
<PAGE> 55
RP Financial, LC.
Page 3.8
<TABLE>
<CAPTION>
As of July 17, 1997
-------------------
Publicly- All
Traded Publicly-
Peer New York Traded
Group Thrifts(1) Thrifts(2)
----- ---------- ----------
<S> <C> <C> <C>
Key Financial Ratios
--------------------
Equity/Assets 11.16% 12.63% 12.87%
Tangible Equity/Assets 10.60 11.20 12.20
Core Return on Assets ("ROA")(3) 1.06 0.85 0.88
Core Return on Equity ("ROE")(3) 10.63 7.83 7.85
Key Pricing Ratios (Averages)
-----------------------------
Price/Book Ratio ("P/B") 153.26% 135.43% 138.35%
Price/Tangible Book Ratio ("P/TB") 164.79 141.13 141.92
Price/Core Earnings Multiple ("P/E")(3) 16.12x 18.89x 18.38x
Price/Assets Ratio ("P/A") 17.42% 17.49% 17.01%
</TABLE>
(1) Excludes institutions in MHC form and subject to acquisition.
(2) Excludes institutions subject to acquisition.
(3) Adjusted to omit non-operating items (including the special SAIF
assessment) on an after-tax basis and extraordinary items.
The following comparative analyses are based on the latest
publicly-available financial information for both the Bank and the Peer Group,
which is as of or for the 12 months ending March 31, 1997. The Bank's balance
sheet growth rates are annualized for the 16 month period from December 31,
1995 to April 30, 1997.
Financial Condition
The Bank is larger than the average Peer Group member, but during the
past sixteen months the Bank experienced lower asset growth than the average
growth experienced by the Peer Group. During this period the Bank was
incorporating the operations of Gateway and redeploying interest-earning assets
from lower yielding U.S. Government and agency securities into higher yielding
loans and MBS. The Bank's deposit growth during this period approximated the
rate of interest credited, and borrowings were used to meet funding needs.
Most of the Peer Group members experienced asset growth over the twelve month
period ended March 31, 1997, funded through deposit growth and increased
utilization of borrowed funds. Like the Bank, the Peer Group's asset growth
occurred in the loan and MBS portfolio. The Bank's cash and
<PAGE> 56
RP Financial, LC.
Page 3.9
investments declined, while the Peer Group's balance, on average, was
unchanged. (Note: Data fields designated "NM" or "not meaningful" in the
growth section of Table 3.2, representing growth in excess of 100 percent, are
excluded from averages.)
The Peer Group is better capitalized than the Bank on a pre-conversion
basis on both a reported and tangible capital basis, and like the Bank all Peer
Group members meet the FDICIA "well-capitalized" standards. Specifically, the
Bank's current reported and tangible capital levels of 9.6 and 8.5 percent of
assets, respectively, fall below the Peer Group's reported and tangible capital
levels of 11.2 and 10.6 percent, respectively. The Bank's pro forma capital is
anticipated to exceed the Peer Group's average and will provide greater
leverage potential than the Peer Group, although in the intermediate term the
higher capital will lead to a disadvantage in terms of ROE. As a result of the
recently completed Gateway acquisition, the Bank's intangible assets ratio is
nearly double the Peer Group average, 1.1 and 0.5 percent of assets,
respectively. The Bank's tangible equity the past year grew more quickly than
the average Peer Group member given (a) the Bank's greater amortization of
intangible assets and (b) the various capital management strategies employed by
the Peer Group, particularly dividends and stock repurchases.
The Bank's interest-earning assets ("IEA") position (including cash
and equivalents) of 96.4 percent of assets is very comparable to the Peer Group
average of 96.9 percent. The Bank has a lower proportion of cash and
investments and a higher proportion of MBS than the Peer Group average due to
the balance sheet restructuring that has been occurring over the past several
years. The Bank and the Peer Group maintain similar proportions of
loans/assets based on measures of 52.8 and 54.1 percent, respectively.
Following the recent investment portfolio restructuring, the Bank now
classifies all investment securities and MBS as AFS. In contrast, the split of
AFS and HTM investment and MBS for the Peer Group, on average, was 50.4 and
49.6 percent, respectively, as of the most recent date. Accordingly, the Bank
may be subject to greater market value adjustments to stockholders' equity than
the Peer Group in the future. However, as of April 30, 1997, the Bank's AFS
adjustment represents positive 1.94 percent of total stockholders' equity
compared to negative 0.60 percent for the Peer Group, on average.
<PAGE> 57
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.2
Balance Sheet Composition and Growth Rates
Comparable Institution Analysis
As of March 31, 1997
<TABLE>
<CAPTION>
Balance Sheet as a Percent of Assets
----------------------------------------------------------------------------------------
Cash and Borrowed Subd. Net Goodwill Tng Net MEMO:
Investments Loans MBS Deposits Funds Debt Worth & Intang Worth Pref.Stock
----------- ------ ------ -------- -------- ------- -------- -------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Staten Island Savings Bank
- --------------------------
April 30, 1997 16.8 52.8 26.8 86.9 1.6 0.0 9.6 1.1 8.5 0.0
SAIF-Insured Thrifts 18.3 67.0 11.3 71.7 14.2 0.2 12.6 0.2 12.3 0.0
State of NY 23.3 54.8 18.4 73.9 12.7 0.0 11.8 0.6 11.2 0.1
Comparable Group Average 21.0 54.1 21.8 74.6 12.4 0.1 11.2 0.5 10.6 0.0
Mid-Atlantic Companies 21.0 54.1 21.8 74.6 12.4 0.1 11.2 0.5 10.6 0.0
Comparable Group
- ----------------
Mid-Atlantic Companies
- ----------------------
ALBK ALBANK Fin. Corp. of Albany NY 16.0 72.6 7.0 85.5 2.9 0.0 9.2 1.2 8.0 0.0
DIME Dime Community Bancorp of NY 21.9 54.4 18.9 77.8 4.3 0.0 15.4 2.2 13.2 0.0
FMCO FMS Financial Corp. of NJ 21.6 56.0 18.1 85.7 5.1 1.8 6.3 0.1 6.2 0.0
FSPG First Home Bancorp of NJ 41.7 51.8 4.6 58.1 34.8 0.0 6.6 0.1 6.5 0.0
FFIC Flushing Fin. Corp. of NY 26.0 52.2 19.1 73.7 9.4 0.0 16.0 0.0 16.0 0.0
HAVN Haven Bancorp of Woodhaven NY 32.9 53.2 11.6 67.3 23.7 0.0 5.8 0.0 5.8 0.0
IBSF IBS Financial Corp. of NJ 30.2 26.8 41.2 77.1 5.0 0.0 17.0 0.0 17.0 0.0
JSBF JSB Financial, Inc. of NY 40.1 57.0 0.0 74.5 0.0 0.0 22.2 0.0 22.2 0.0
OCFC Ocean Fin. Corp. of NJ 15.1 50.4 31.4 68.1 12.6 0.0 17.8 0.0 17.8 0.0
PFSB PennFed Fin. Services of NJ 2.0 70.5 24.0 70.9 20.4 0.0 7.5 1.3 6.2 0.0
PSBK Progressive Bank, Inc. of NY 15.2 66.7 14.3 90.6 0.0 0.0 8.4 1.0 7.4 0.0
PULS Pulse Bancorp of S. River NJ 37.6 24.5 36.0 79.4 12.1 0.0 7.8 0.0 7.8 0.0
QCSB Queens County Bancorp of NY 7.2 85.4 4.9 74.5 7.7 0.0 15.0 0.0 15.0 0.0
RELY Reliance Bancorp, Inc. of NY 5.8 44.7 45.0 72.9 17.7 0.0 8.0 2.4 5.6 0.0
SFIN Statewide Fin. Corp. of NJ 8.1 48.4 41.1 67.7 22.2 0.0 9.3 0.0 9.3 0.0
ROSE T R Financial Corp. of NY 14.4 51.5 32.5 70.6 21.1 0.0 6.2 0.0 6.2 0.0
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Annual Growth Rates Regulatory Capital
------------------------------------------------------------ -------------------------
Cash and Loans Borrows. Net Tng Net
Assets Investments & MBS Deposits &Subdebt Worth Worth Tangible Core Reg.Cap.
------ ----------- ------ -------- -------- -------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Staten Island Savings Bank
- --------------------------
April 30, 1997 5.15 -21.22 13.39 3.45 NM 13.17 16.97 8.44 9.53 19.59
SAIF-Insured Thrifts 12.99 5.33 13.64 7.44 23.69 -1.54 -2.07 10.96 11.03 23.16
State of NY 10.95 -2.80 13.38 4.08 18.03 -1.52 -1.49 9.71 9.36 23.32
Comparable Group Average 10.62 0.93 13.50 6.16 36.17 -1.51 -1.76 9.39 8.99 21.84
Mid-Atlantic Companies 10.62 0.93 13.50 6.16 36.17 -1.51 -1.76 9.39 8.99 21.84
Comparable Group
- ----------------
Mid-Atlantic Companies
- ----------------------
ALBK ALBANK Fin. Corp. of Albany NY 4.90 -26.02 14.47 3.46 NM 0.27 -1.45 7.23 7.23 12.47
DIME Dime Community Bancorp of NY 13.14 12.93 16.42 0.43 NM NM NM 10.45 10.45 21.55
FMCO FMS Financial Corp. of NJ 9.47 28.22 4.90 12.49 -15.56 4.59 5.31 7.23 7.23 15.11
FSPG First Home Bancorp of NJ 8.98 NM -31.29 6.71 13.00 10.15 11.19 6.50 6.50 16.49
FFIC Flushing Fin. Corp. of NY 9.71 -14.38 24.29 5.48 NM -6.14 -6.14 12.22 12.22 27.06
HAVN Haven Bancorp of Woodhaven NY 16.34 3.10 24.66 6.12 70.03 7.07 7.28 6.81 6.81 14.82
IBSF IBS Financial Corp. of NJ -2.23 -41.87 40.54 -1.10 83.66 -18.37 -18.37 16.87 16.87 61.20
JSBF JSB Financial, Inc. of NY -1.13 -11.18 9.48 -2.33 NM 0.42 0.42 13.76 13.76 20.17
OCFC Ocean Fin. Corp. of NJ 22.80 52.61 17.75 1.54 77.44 NM NM 11.44 11.44 30.85
PFSB PennFed Fin. Services of NJ 22.45 -42.10 26.90 11.81 95.10 2.71 6.91 5.66 5.70 12.31
PSBK Progressive Bank, Inc. of NY 11.73 29.56 8.79 19.97 -100.00 5.35 -6.67 NM 7.39 14.43
PULS Pulse Bancorp of S. River NJ 14.03 22.60 9.89 3.40 NM -25.19 -25.19 NM 7.36 26.96
QCSB Queens County Bancorp of NY 9.04 -3.20 10.63 8.08 78.04 -3.79 -3.79 NM 10.09 18.16
RELY Reliance Bancorp, Inc. of NY 10.46 30.15 10.82 4.42 53.63 0.22 4.14 5.43 5.43 14.95
SFIN Statewide Fin. Corp. of NJ 6.76 -32.30 12.30 3.12 31.39 -10.51 -10.43 9.02 9.02 24.56
ROSE T R Financial Corp. of NY 13.40 5.87 15.42 14.95 11.14 12.12 12.12 NM 6.39 18.35
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 58
RP Financial, LC.
Page 3.11
The Bank's and the Peer Group's ratios of fixed assets/assets were
similar at 1.05 and 1.00 percent, respectively. The Bank maintains a higher
average branch deposit size of $94.5 million versus $66.5 million for the Peer
Group.
The Bank's interest-bearing liabilities ("IBL") ratio of 88.5 percent
of assets is higher than the Peer Group's ratio of 87.1 percent, reflecting the
Bank's lower capitalization. On a post-conversion basis, this relationship can
be expected to be reversed with the infusion of new capital and the extent to
which deposits are withdrawn to fund stock purchases. Currently, the Bank's
funding liabilities are primarily composed of deposits, although borrowings are
anticipated to be utilized more extensively in coming years as part of the
Bank's leverage strategy. The Bank's borrowings/assets ratio approximated 1.6
percent at March 31, 1997, compared to 12.4 percent for the Peer Group. In
terms of deposit mix, approximately 67 percent of the Bank's deposits are in
core deposits, as compared to the Peer Group average of approximately 43
percent.
The Peer Group presently appears to maintain greater balance sheet
strength and earnings power than the Bank due to the higher capital position of
the Peer Group. The strengthened capital position from conversion, the partial
withdrawal of funds to purchase conversion stock and the reinvestment of
proceeds in IEA should diminish the Bank's comparative disadvantage and improve
earnings power.
Income and Expense Trends
Reported profitability for the past 12 months approximated 1.22 and
0.83 percent of average assets for the Bank and the Peer Group, respectively
(see Table 3.3). The Peer Group's lower reported earnings show the impact of
the one-time special assessment paid by the 11 SAIF-Insured thrifts members of
the Peer Group. On a core earnings basis, which excludes the SAIF assessment
as well as other net non-operating items on an after-tax basis (and the
charitable foundation contribution by Ocean Financial), the Peer Group's
earnings were much higher at 1.06 percent of average assets, while the Bank's
earnings declined slightly to 1.10 percent of average assets. The Bank's
earnings benefit was partially attributable to a reversal of previous tax
provisions during the last 12 months. Adjustments to the Bank's earnings
include the application of the effective statutory tax rate.
<PAGE> 59
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.3
Income as a Percent of Average Assets and Yields, Costs, Spreads
Comparable Institution Analysis
For the Twelve Months Ended March 31, 1997
<TABLE>
<CAPTION>
Net Interest Income Other Income
---------------------------- -------------------
Loss NII Total
Net Provis. After Loan R.E. Other Other
Income Income Expense NII on IEA Provis. Fees Oper. Income Income
------ ------ ------- ------ ------- ------- ---- ----- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Staten Island Savings Bank
- --------------------------
April 30, 1997 1.22 7.15 2.82 4.33 0.32 4.01 0.00 0.00 0.39 0.39
SAIF-Insured Thrifts 0.64 7.34 4.08 3.26 0.14 3.12 0.12 0.01 0.29 0.42
State of NY 0.66 7.07 3.66 3.41 0.19 3.21 0.07 -0.04 0.23 0.26
Comparable Group Average 0.83 7.18 3.76 3.42 0.08 3.34 0.07 -0.01 0.18 0.24
Mid-Atlantic Companies 0.83 7.18 3.76 3.42 0.08 3.34 0.07 -0.01 0.18 0.24
Comparable Group
- ----------------
Mid-Atlantic Companies
- ----------------------
ALBK ALBANK Fin. Corp. of Albany NY 0.81 7.32 3.60 3.72 0.18 3.54 0.05 -0.04 0.30 0.30
DIME Dime Community Bancorp of NY 0.92 6.42 2.94 3.48 0.35 3.13 0.04 -0.04 0.17 0.17
FMCO FMS Financial Corp. of NJ 0.64 7.15 3.66 3.50 0.02 3.47 0.04 -0.03 0.42 0.43
FSPG First Home Bancorp of NJ 0.91 7.60 4.48 3.11 0.08 3.03 0.04 -0.05 0.16 0.15
FFIC Flushing Fin. Corp. of NY 0.90 7.35 3.52 3.84 0.04 3.80 0.08 -0.04 0.13 0.16
HAVN Haven Bancorp of Woodhaven NY 0.62 7.09 3.99 3.09 0.20 2.89 0.11 -0.02 0.51 0.60
IBSF IBS Financial Corp. of NJ 0.52 6.96 3.79 3.18 0.01 3.17 0.05 0.00 0.03 0.09
JSBF JSB Financial, Inc. of NY 1.77 7.02 2.60 4.42 0.04 4.38 0.18 0.16 0.03 0.36
OCFC Ocean Fin. Corp. of NJ -0.05 6.75 3.60 3.15 0.06 3.09 0.15 0.03 0.03 0.22
PFSB PennFed Fin. Services of NJ 0.57 7.11 4.32 2.79 0.06 2.74 0.12 -0.01 0.05 0.16
PSBK Progressive Bank, Inc. of NY 1.10 7.88 4.05 3.83 0.30 3.53 0.02 -0.08 0.38 0.31
PULS Pulse Bancorp of S. River NJ 0.72 7.02 4.25 2.76 0.00 2.76 0.06 -0.05 0.01 0.02
QCSB Queens County Bancorp of NY 1.72 7.92 3.47 4.45 -0.15 4.60 0.03 0.00 0.11 0.14
RELY Reliance Bancorp, Inc. of NY 0.56 7.09 3.77 3.32 0.04 3.28 0.05 -0.03 0.13 0.15
SFIN Statewide Fin. Corp. of NJ 0.51 7.14 3.69 3.45 0.08 3.37 0.00 -0.01 0.32 0.31
ROSE T R Financial Corp. of NY 0.98 7.11 4.47 2.63 0.04 2.60 0.09 -0.02 0.18 0.24
</TABLE>
<TABLE>
<CAPTION>
G&A/Other Exp. Non-Op. Items Yields, Costs, and Spreads
--------------- -------------- -------------------------
MEMO: MEMO:
G&A Goodwill Net Extrao. Yield Cost Yld-Cost Assets/ Effective
Expense Amort. Gains Items On Assets Of Funds Spread FTE Emp. Tax Rate
------- ------- ------- ------- --------- -------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Staten Island Savings Bank
- --------------------------
April 30, 1997 2.21 0.12 -0.19 0.00 7.50 3.56 3.94 3,336 35.40
SAIF-Insured Thrifts 2.21 0.02 -0.33 0.00 7.18 4.51 2.67 4,446 35.75
State of NY 2.11 0.06 -0.29 0.00 6.62 3.84 2.77 5,025 39.53
Comparable Group Average 1.87 0.05 -0.35 0.00 7.42 4.33 3.09 5,544 37.14
Mid-Atlantic Companies 1.87 0.05 -0.35 0.00 7.42 4.33 3.09 5,544 37.14
Comparable Group
- ----------------
Mid-Atlantic Companies
- ----------------------
ALBK ALBANK Fin. Corp. of Albany NY 2.18 0.09 -0.30 0.00 7.65 4.09 3.56 2,978 36.17
DIME Dime Community Bancorp of NY 1.62 0.15 -0.17 0.00 6.77 3.68 3.09 5,113 35.82
FMCO FMS Financial Corp. of NJ 2.42 0.06 -0.50 0.00 7.49 3.96 3.53 2,146 30.47
FSPG First Home Bancorp of NJ 1.79 -0.01 -0.43 0.00 7.75 4.82 2.93 4,420 37.47
FFIC Flushing Fin. Corp. of NY 2.36 0.00 -0.05 0.00 7.60 4.33 3.27 4,056 49.58
HAVN Haven Bancorp of Woodhaven NY 2.10 0.01 -0.43 0.00 7.27 4.36 2.91 3,972 37.02
IBSF IBS Financial Corp. of NJ 1.88 0.00 -0.54 0.00 7.09 4.72 2.37 5,693 37.19
JSBF JSB Financial, Inc. of NY 1.83 0.00 0.14 0.00 7.25 3.44 3.81 4,312 42.15
OCFC Ocean Fin. Corp. of NJ 1.70 0.00 -1.53 0.01 6.96 4.41 2.55 6,060 NM
PFSB PennFed Fin. Services of NJ 1.31 0.22 -0.42 0.00 7.41 4.75 2.66 6,770 39.33
PSBK Progressive Bank, Inc. of NY 2.30 0.16 -0.01 0.00 8.20 4.50 3.71 3,239 19.90
PULS Pulse Bancorp of S. River NJ 1.12 0.00 -0.54 0.00 7.17 4.68 2.49 9,735 36.03
QCSB Queens County Bancorp of NY 1.84 0.00 -0.03 0.00 8.13 4.27 3.86 11,444 42.17
RELY Reliance Bancorp, Inc. of NY 1.70 0.19 -0.44 0.00 7.46 4.18 3.28 4,953 50.44
SFIN Statewide Fin. Corp. of NJ 2.45 0.01 -0.57 0.00 7.31 4.14 3.16 6,103 22.02
ROSE T R Financial Corp. of NY 1.35 0.00 0.18 0.00 7.24 4.89 2.35 7,720 41.35
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 60
RP Financial, LC.
Page 3.13
As described in greater detail below, the Bank's reported
earnings advantage was largely attributable to higher net interest income,
higher non-interest income, lower net non-operating losses, and a lower tax
rate, despite slightly higher operating expenses and loan loss provisions.
Net Interest Income
The Bank's interest income ratio of 7.15 percent of average
assets was very comparable to the Peer Group average of 7.18 percent. The Bank
operated with a slightly higher yield on assets than the Peer Group (7.50
percent and 7.42 percent, respectively), but the Peer Group's higher proportion
of IEA made up the difference. Following reinvestment of conversion proceeds,
the Bank's interest income ratio can be expected to increase although yields
may be diluted as such funds are initially invested into short- to
intermediate-term securities.
The Bank's 91 basis point advantage in the net interest income
ratio was primarily attributable to a lower interest expense ratio arising from
a lower cost of funds. The Bank's interest expense ratio was 94 basis points
lower than the Peer Group's. The low funding costs enjoyed by the Bank are a
reflection of the relatively high proportion of core deposits maintained by the
Bank (67 percent of total deposits versus 43 percent for the Peer Group). The
Bank's cost of funds of 3.56 percent was much lower than the Peer Group average
of 4.33 percent. Following the conversion, the Bank's cost of funds is likely
to rise as borrowings are used to leverage capital. This increase will be
partially offset by the replacement of deposits with new capital.
On balance, the Bank's net interest income ratio can be
expected to increase moderately on a post-conversion basis, and will continue
to exceed Peer Group levels.
Provisions for Loan Losses
During the last 12 months, the Bank's provision for loan
losses was substantially higher than the Peer Group average, 0.32 and 0.08
percent of average assets, respectively. The Bank's relatively high loan loss
provisions were established in response to the steep rise in non-performing
loans from the Gateway acquisition. Going forward, the Bank's annual loan loss
provisions are expected to decline but perhaps still exceed the current Peer
Group levels given a higher non-performing assets ratio.
<PAGE> 61
RP Financial, LC.
Page 3.14
Non-Interest Income
The Bank reported higher non-interest operating income than
the Peer Group, based on levels of 0.39 percent and 0.24 percent of average
assets, respectively. The majority of the Bank's non-interest operating income
is generated from fees on the core deposit base, supplemented by loan servicing
fees, other fee income, and various other miscellaneous sources. The Peer
Group's sources of non-interest operating income are similar to the Bank's.
Overall, neither the Bank nor the Peer Group rely heavily on non-interest
operating income as a source of earnings.
Operating Expenses
The Bank operates with higher operating expenses than the Peer
Group, based on measures of 2.21 and 1.87 percent of average assets,
respectively (excluding goodwill amortization and the special SAIF assessment).
The Bank's higher operating expense ratio is consistent with the Bank's higher
level of core deposits, which are more costly to service than time deposits,
and the additional staffing and other expenses that arose from the Gateway
acquisition. The high staffing level at the Bank is evident in the assets per
full-time equivalent employee ratio of $3.3 million, which is well below the
Peer Group average of $5.5 million. Following the conversion transaction, the
Bank's operating expenses can be expected to increase with the incorporation of
stock benefit plans and the additional costs of operating as a public company.
Intangibles Amortization
As would be expected, given the Bank's higher intangible
assets level, the Bank's intangibles amortization expense is much higher than
the Peer Group average, 0.12 and 0.05 basis points, respectively.
Net Non-Operating Items
The Bank's net non-operating loss was lower than the Peer
Group's, on average, given the fact that 11 of the Peer Group members were
subject to the special SAIF assessment. The Bank's losses were attributable to
the sale of investment securities as part of the balance sheet restructuring.
<PAGE> 62
RP Financial, LC.
Page 3.15
Efficiency Ratio
The Bank operates with a better efficiency ratio (operating
expenses, excluding goodwill amortization and the special SAIF assessment, as a
percent of the sum of net interest income before loan loss provisions and other
operating income) than the Peer Group, 47 and 51 percent, respectively. The
Bank's higher operating expenses, offsetting higher net interest income and
higher non-interest operating income, are expected to increase on a
post-conversion basis. The Bank's efficiency ratio is not expected to
significantly improve on a post-conversion basis.
Income Taxes
The Bank's effective tax rate of 35.4 percent was lower than the Peer
Group's average effective tax rate of 37.1 percent. The New Jersey
institutions are subject to a lower state tax rate than New York institutions,
and thus reduce the average effective tax rate of the Peer Group. The Bank
paid lower than usual taxes due to differences between the New York State and
New York City tax code which separated the city and state laws from the federal
tax laws relating to bad debt reserves and maintained the PTI deduction for
both the city and state and eliminated the potential recapture of previous city
and state reserves. Going forward, the Bank's effective statutory federal,
state and local tax rate is expected to approximate 47 percent.
Loan Composition
Perhaps one of the greatest differences between the Bank and the Peer
Group is loan composition, with the Bank having a less diversified loan
portfolio than the Peer Group (Table 3.4). The Bank's portfolio is dominated
by single family residential mortgages and MBS (83.9 percent of total loans and
MBS), underscoring its traditional strategy versus 75.4 percent for the Peer
Group. The Peer Group has a higher proportion of multi-family/commercial real
estate loans were acquired in the Gateway transaction. Both the Bank and the
Peer Group have limited portfolios of loans serviced for others, representing
8.1 and 7.1 percent of assets, respectively.
The Bank has a slightly larger balance of construction and land loans
in portfolio than the Peer Group, based on measures of 2.1 and 0.7 percent,
respectively, of total loans and MBS. The commercial business and consumer
loan portfolios of the Bank and the Peer Group were relatively small,
representing approximately 4.5 and 3.5 percent, respectively.
<PAGE> 63
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.4
Loan Portfolio Composition and Related Information
Comparable Institution Analysis
As of March 31, 1997
<TABLE>
<CAPTION>
Portfolio Composition as a Percent of MBS and Loans
------------------------------------------------------
1-4 Constr. 5+Unit Commerc. RWA/ Serviced Servicing
Institution MBS Family & Land Comm RE Business Consumer Assets For Others Assets
- ----------- ------ ------ ------ ------ ------ -------- ------ ---------- ------
(%) (%) (%) (%) (%) (%) (%) ($000) ($000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Staten Island Savings Bank 33.19 50.71 2.11 9.48 1.03 3.48 45.44 149,425 300
SAIF-Insured Thrifts 15.15 61.77 5.40 11.57 6.58 1.70 50.75 341,492 2,501
State of NY 26.29 48.59 1.52 17.02 5.77 1.38 44.23 633,835 5,945
Comparable Group Average 29.38 45.99 0.67 20.79 2.50 0.95 45.60 97,534 401
Comparable Group
- ----------------
ALBK ALBANK Fin. Corp. of Albany NY 8.63 68.05 0.83 5.86 8.53 8.42 62.80 280,933 594
DIME Dime Community Bancorp of NY 25.75 28.33 0.03 45.62 0.66 0.00 49.18 76,184 27
FMCO FMS Financial Corp. of NJ 26.47 61.79 2.68 8.61 0.99 0.37 50.75 28,326 0
FSPG First Home Bancorp of NJ 7.05 81.59 1.70 5.49 4.85 0.63 42.54 65,600 84
FFIC Flushing Fin. Corp. of NY 28.62 43.85 0.00 27.49 0.32 0.00 45.29 46,272 0
HAVN Haven Bancorp of Woodhaven NY 26.69 48.42 0.89 20.75 3.29 0.04 48.81 192,546 0
IBSF IBS Financial Corp. of NJ 70.98 25.70 0.20 2.96 0.51 0.09 27.74 1,573 0
JSBF JSB Financial, Inc. of NY 0.72 9.39 0.28 86.54 3.39 0.16 60.88 15,229 0
OCFC Ocean Fin. Corp. of NJ 33.70 62.81 1.02 1.56 1.46 0.00 39.41 151,450 1,705
PFSB PennFed Fin. Services of NJ 31.20 63.42 0.00 4.87 0.19 0.04 47.29 81,702 537
PSBK Progressive Bank, Inc. of NY 16.47 56.25 1.36 15.08 9.16 1.68 56.09 53,920 36
PULS Pulse Bancorp of S. River NJ 55.27 25.65 0.04 18.95 0.06 0.00 28.54 0 0
QCSB Queens County Bancorp of NY 6.65 22.95 0.11 70.32 0.06 0.00 58.21 0 0
RELY Reliance Bancorp, Inc. of NY 50.02 38.85 0.67 7.23 3.29 0.08 37.23 424,129 3,302
SFIN Statewide Fin. Corp. of NJ 44.25 48.73 0.59 2.59 2.81 0.92 38.39 0 0
ROSE T R Financial Corp. of NY 37.61 50.06 0.39 8.81 0.39 2.73 36.44 142,678 127
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 64
RP Financial, LC.
Page 3.17
The Bank and the Peer Group maintained comparable risk-weighted
assets/assets ratio, measured at 45.4 and 45.6 percent, respectively.
Interest Rate Risk
Public companies are not required to report interest rate risk in a
standard fashion and many do not specifically quantify their interest rate risk
on a regular basis. Furthermore, the computation of interest rate risk is
predicated on numerous assumptions, many of which are unique among
institutions. As a result, we have sought to measure interest rate risk by
evaluating balance sheet composition and recent quarterly changes in net
interest income.
Currently, the Bank's asset composition suggests greater interest rate
risk given its lower capitalization and higher non-earning assets, resulting in
a lower IEA/IBL ratio. As a result, the Bank has greater dependence of the
yield-cost spread to sustain the net interest margin. Post-conversion
capitalization should diminish the Bank's current comparative disadvantage in
this regard and thereby lessen interest rate risk. The interest rate risk
associated with the Bank's asset base is further diminished by the higher
proportion of core deposits maintained by the Bank.
The Bank's greater fluctuation in net interest income during the last
5 quarters, as compared to the Peer Group average, suggests greater interest
rate risk exposure, although the Bank's data was subject to the impact of
acquisition and portfolio restructuring. It is expected that the infusion of
stock proceeds will serve to enhance the stability of the Bank's net income and
diminish the comparative disadvantage relative to the Peer Group.
Credit Risk
The Bank's credit risk exposure appears to be somewhat higher than the
Peer Group's, on average, as indicated by lower reserve coverage ratios and
higher non-performing loans and assets ratios. As shown in Table 3.6, the
Bank's ratio of non-performing loans/loans and non-performing assets/assets
ratios of 2.50 and 1.39 percent, substantially exceeded the Peer Group's
respective ratios of 1.07 and 0.70 percent. The Bank's loss reserves/loans
ratio of 1.48 percent was above the Peer Group average of 1.00 percent, but the
Bank's reserve coverage ratio (loss reserves as a percent of non-performing
loans) of 60.16 percent was well below the Peer Group average of 107.72
percent. The Bank also maintains a lower ratio of reserves to NPAs than the
<PAGE> 65
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.5
Interest Rate Risk Measures and Net Interest Income Volatility
Comparable Institution Analysis
As of March 31, 1997 or Most Recent Date Available
<TABLE>
<CAPTION>
Balance Sheet Measures
-------------------------- Quarterly Change in Net Interest Income
Non-Earn. ----------------------------------------------------------
Equity/ IEA/ Assets/
Institution Assets IBL Assets 03/31/97 12/31/96 09/30/96 06/30/96 03/31/96 12/31/95
- ----------- ------ ------ ------ -------- -------- -------- -------- -------- --------
(%) (%) (%) (change in net interest income is annualized in basis points)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Staten Island Savings Bank 8.5 108.9 3.6 -40 47 8 19 -47 70
SAIF-Insured Thrifts 12.3 112.5 3.7 1 -0 -2 8 4 6
State of NY 11.1 108.6 3.4 0 5 1 7 9 7
Comparable Group Average 10.6 111.6 3.0 1 2 4 -3 7 7
Comparable Group
- ----------------
ALBK ALBANK Fin. Corp. of Albany NY 8.0 108.3 4.3 11 -1 -8 -17 31 -5
DIME Dime Community Bancorp of NY 13.2 115.9 4.9 3 46 96 NA NA NA
FMCO FMS Financial Corp. of NJ 6.2 103.3 4.3 -9 3 12 8 -7 -2
FSPG First Home Bancorp of NJ 6.5 105.7 1.9 -3 -7 -5 -5 17 2
FFIC Flushing Fin. Corp. of NY 16.0 117.0 2.8 -1 0 9 4 25 18
HAVN Haven Bancorp of Woodhaven NY 5.8 107.3 2.3 -19 11 -9 10 10 11
IBSF IBS Financial Corp. of NJ 17.0 119.7 1.8 -9 -23 3 3 -16 -12
JSBF JSB Financial, Inc. of NY 22.2 130.3 2.9 1 0 4 7 0 -1
OCFC Ocean Fin. Corp. of NJ 17.8 120.0 3.1 -16 -13 59 -5 -3 1
PFSB PennFed Fin. Services of NJ 6.2 105.7 3.5 -3 -11 -11 -12 -2 20
PSBK Progressive Bank, Inc. of NY 7.4 106.2 3.8 7 16 -33 12 -1 -3
PULS Pulse Bancorp of S. River NJ 7.8 107.2 1.9 8 -6 -18 -12 5 -13
QCSB Queens County Bancorp of NY 15.0 118.5 2.6 2 4 -13 9 8 2
RELY Reliance Bancorp, Inc. of NY 5.6 105.4 4.5 -2 1 -5 -33 27 20
SFIN Statewide Fin. Corp. of NJ 9.3 108.6 2.4 41 13 -2 -19 3 55
ROSE T R Financial Corp. of NY 6.2 107.3 1.6 4 -1 -10 6 9 7
</TABLE>
NA=Change is greater than 100 basis points during the quarter.
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 66
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 3.6
Credit Risk Measures and Related Information
Comparable Institution Analysis
As of March 31, 1997 or Most Recent Date Available
<TABLE>
<CAPTION>
NPAs & Rsrves/
REO/ 90+Del/ NPLs/ Rsrves/ Rsrves/ NPAs & Net Loan NLCs/
Institution Assets Assets Loans Loans NPLs 90+Del Chargoffs Loans
- ----------- ------ ------ ------ ------ ------ -------- --------- ----------
(%) (%) (%) (%) (%) (%) ($000) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Staten Island Savings Bank 0.07 1.39 2.50 1.50 60.16 57.08 -43 0.00
SAIF-Insured Thrifts 0.28 0.78 0.86 0.82 173.26 125.49 275 0.10
State of NY 0.20 1.15 1.58 1.13 97.86 75.62 312 0.11
Comparable Group Average 0.13 0.70 1.07 1.00 107.72 86.53 145 0.06
Comparable Group
- ----------------
ALBK ALBANK Fin. Corp. of Albany NY 0.11 0.92 0.85 0.98 115.39 78.02 704 0.11
DIME Dime Community Bancorp of NY 0.15 0.82 1.20 1.45 120.17 97.78 56 0.03
FMCO FMS Financial Corp. of NJ 0.33 1.07 1.31 0.90 68.65 47.56 0 0.00
FSPG First Home Bancorp of NJ 0.14 0.79 1.24 1.41 113.64 93.39 104 0.16
FFIC Flushing Fin. Corp. of NY 0.04 0.27 0.44 1.28 288.53 251.62 232 -0.05
HAVN Haven Bancorp of Woodhaven NY 0.06 0.78 1.34 1.23 92.04 84.95 260 -0.02
IBSF IBS Financial Corp. of NJ 0.00 0.15 0.55 0.52 94.57 94.57 0 0.00
JSBF JSB Financial, Inc. of NY 0.74 1.08 1.66 0.62 37.50 33.09 7 0.00
OCFC Ocean Fin. Corp. of NJ 0.10 0.64 1.07 0.88 81.76 69.12 59 0.03
PFSB PennFed Fin. Services of NJ 0.06 0.69 0.90 0.31 34.69 31.83 131 0.06
PSBK Progressive Bank, Inc. of NY 0.15 0.84 0.98 1.58 160.96 127.85 410 0.28
PULS Pulse Bancorp of S. River NJ 0.04 0.75 2.21 1.83 82.99 60.59 72 0.23
QCSB Queens County Bancorp of NY 0.00 0.75 0.58 0.80 138.21 91.25 1 -0.02
RELY Reliance Bancorp, Inc. of NY 0.06 0.75 1.50 0.56 37.60 33.69 187 0.09
SFIN Statewide Fin. Corp. of NJ 0.06 0.49 0.72 0.81 111.69 80.61 73 0.09
ROSE T R Financial Corp. of NY 0.09 0.40 0.57 0.83 145.05 108.61 19 0.00
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 67
RP Financial, LC.
Page 3.20
Peer Group, based on ratios of 57.08 percent and 86.53 percent, respectively.
The Bank recorded no net loan chargeoffs over the past twelve months, while the
Peer Group charged off very minor balances of loans receivable.
Market Area and Competitive Characteristics
As indicated previously, all 16 Peer Group companies are regionally
based, and thus share similar market area and competitive characteristics with
the Bank. Twelve of the sixteen Peer Group companies operate in the greater
New York metropolitan area (including northern New Jersey). IBS Financial, FMS
Financial and First Home Bancorp all operate primarily in southern New Jersey.
ALBANK operates north of the New York MSA in urban and suburban markets in and
around Albany. Ocean operates on the Jersey shore and serves suburban markets
and beach communities. In general, the Peer Group members serve urban or
densely populated suburban markets with similar demographic and economic
characteristics that are likely to react similarly to broader economic trends
that occur in the northeast.
The Peer Group's average asset size approximates $1.4 billion, less
than the Bank's pro forma asset base of approximately $2 billion. Both operate
substantial branch office networks and compete in urban/suburban markets with
larger commercial banks. In general, the Bank and Peer Group also engage in
varied lending activities, including residential lending, commercial real
estate lending (including multi-family lending) and commercial business and
consumer lending.
<PAGE> 68
RP Financial, LC.
Page 4.1
IV. VALUATION ANALYSIS
Introduction
This chapter presents the valuation analysis, prepared pursuant to the
regulatory valuation guidelines, and valuation adjustments and assumptions used
to determine the estimated pro forma market value of the common stock to be
issued in conjunction with the Bank's conversion transaction.
Appraisal Guidelines
The OTS appraisal guidelines, most recently amended in written form in
October 1994, specify the methodology for estimating the pro forma market value
of an institution pursuant to a mutual-to-stock conversion. The valuation
methodology provides for: (1) the selection of a peer group of comparable
publicly-traded institutions, excluding those converted for less than a year,
subject to acquisition or in MHC form; (2) a financial and operational
comparison of the subject company to the selected peer group, identifying key
differences and similarities; and (3) a valuation analysis in which the pro
forma market value of the subject company is determined based on the market
pricing of the peer group as of the date of valuation, incorporating valuation
adjustments for key differences. In addition, the pricing characteristics of
recent conversions, both at conversion and in the aftermarket, must be
considered.
RP Financial Approach to the Valuation
RP Financial's valuation analysis complies with the above-referenced
appraisal guidelines. Accordingly, the valuation incorporates a detailed
analysis based on the Peer Group discussed in Chapter III, incorporating
"fundamental analysis" techniques. Additionally, the valuation incorporates a
"technical analysis" of recently completed stock conversions, including closing
pricing and aftermarket trading of such conversions. It should be noted that
such analyses cannot possibly fully account for all the market forces which
impact trading activity and pricing characteristics of a particular stock on a
given day.
<PAGE> 69
RP Financial, LC.
Page 4.2
The pro forma market value determined herein is a preliminary value
for the to-be-issued stock. Throughout the conversion process, RP Financial
will: (1) review changes in the Bank's operations and financial condition; (2)
monitor the Bank's operations and financial condition relative to the Peer
Group to identify any fundamental changes; (3) monitor the external factors
affecting value including, but not limited to, local and national economic
conditions, interest rates, and the stock market environment, including the
market for thrift stocks; and (4) monitor pending conversion offerings
(including those in the offering phase) both regionally and nationally. If
material changes should occur during the conversion process, RP Financial will
prepare updated valuation reports reflecting such changes and their related
impact on value, if any, over the course of the conversion process. RP
Financial will also prepare a final valuation update at the closing of the
conversion offering to determine if the preliminary range of value continues to
be appropriate.
The appraised value determined herein is based on the current market
and operating environment for the Bank and for all thrifts. Subsequent changes
in the local and national economy, the legislative and regulatory environment,
the stock market, interest rates, and other external forces (such as natural
disasters or major world events), which may occur from time to time (often with
great unpredictability) may materially impact the market value of all thrift
stocks, including the Bank, or the Bank's value alone. To the extent a change
in factors impacting the Bank's value can be reasonably anticipated and/or
quantified, RP Financial has incorporated the estimated impact into our
analysis.
Valuation Analysis
A fundamental analysis discussing similarities and differences
relative to the Peer Group was presented in Chapter III. The following
sections summarize the key differences between the Bank and the Peer Group and
how those differences affect the pro forma valuation. Emphasis is placed on
the specific strengths and weaknesses of the Bank relative to the Peer Group in
such key areas as financial condition, profitability, growth and viability of
earnings, asset growth, primary market area, dividends, liquidity of the issue,
marketing of the issue, management, and the effect of government regulations
and/or regulatory reform. We have also considered the
<PAGE> 70
RP Financial, LC.
Page 4.3
market for thrift stocks, and in particular new issues, to assess the impact on
value of the Bank coming to market at this time.
1. Financial Condition
The financial condition of an institution is an important determinant
in pro forma market value, because investors typically look to such factors as
liquidity, capital, asset composition and quality, and funding sources in
assessing investment attractiveness. The similarities and differences in the
financial condition of the Bank and the Peer Group are noted as follows:
- Overall A/L Composition. At the present time, the Bank's balance
sheet structure is characterized by a comparatively lower reported and
tangible capital position which weakens the earnings power of the Bank
relative to the Peer Group. On a post-conversion basis, however, the
Bank's capitalization will exceed the Peer Group's. The Bank's
loans/assets ratio falls below the Peer Group average, however, the
Bank has made up for the difference with a heavier concentration in
MBS and lower concentration in cash and investments, resulting in
comparable asset yields. The Bank has further enhanced its earnings
power by maintaining a more favorable core deposits/deposits ratio,
which lowers the overall funding costs. The Peer Group is currently
supplementing deposits with higher borrowings utilization, leveraging
their fixed assets and operating expenses. The Bank's leverage
strategy should align the Bank more closely with the Peer Group's
borrowings utilization, but should also raise funding costs and reduce
spreads.
- Credit Quality. Despite comparable risk weighted assets ratios, the
Peer Group reported more favorable asset quality figures than the
Bank.
- Balance Sheet Liquidity. The Bank currently maintains a comparable
level of cash, investment securities and MBS. The infusion of the
stock proceeds will initially increase the Bank's level of liquid
assets pending investment of the proceeds into loans and other
longer-term investments. The Bank appears to have greater current
borrowings capacity than the Peer Group due to the smaller balance of
borrowed funds as of the most recent period.
- Capital. The Bank operates with a lower pre-conversion capital ratio
than the Peer Group, but this will be reversed on a post-conversion
basis. The increase in capital will depress the Bank's pro forma
return on equity until the proceeds can be effectively reinvested and
leveraged over time.
On balance, we believe the Bank, on a pro forma basis, has financial
condition characteristics that are comparable to the Peer Group. Therefore, we
concluded that no valuation adjustment was warranted for the Bank's financial
strength.
<PAGE> 71
RP Financial, LC.
Page 4.4
2. Profitability, Growth and Viability of Earnings
Earnings are a key factor in determining pro forma market value, as
the level and risk characteristics of an institution's earnings stream and the
prospects and ability to generate future earnings heavily influence the
multiple the investment community will pay for earnings. The major factors
considered in the valuation are described below.
- Reported Earnings. The Bank reported higher profitability than the
Peer Group, reflecting a comparative advantage relative to the Peer
Group in terms of net interest income, non-interest income and
non-operating income despite higher operating expenses (before
intangibles amortization and the special SAIF assessment).
- Core Earnings. The Bank also maintains a more favorable core earnings
posture relative to the Peer Group, net of the special SAIF assessment
and net non-operating items. The Bank's higher net interest income
and higher non-interest operating income is only partially offset by
its higher operating expenses, loan loss provisions and intangibles
amortization. While redeployment of conversion proceeds into
interest-earning assets is expected to enhance the Bank's net interest
income, operating expenses for the Bank are expected to increase as
well. On a pro forma basis, the Bank's core profitability, with a 47
percent effective tax rate, is expected to remain above that of the
Peer Group.
- Interest Rate Risk. The Bank's greater perceived interest rate risk
posture should be partially moderated by the anticipated redeployment
of stock proceeds into interest-earning assets.
- Credit Risk. Loss provisions had a greater impact on the Bank's
earnings in comparison to the Peer Group. In terms of future exposure
to credit quality related losses, the Bank maintains a higher ratio of
non-performing assets and a lower reserve coverage ratio, suggesting
that the Bank has higher potential exposure to earnings from future
credit losses.
- Earnings Growth Potential. The Bank's earnings growth in recent years
appears to have been largely a function of asset growth facilitated
through the Gateway acquisition as well as change in asset mix. As a
result of the Gateway acquisition, the Bank has effectively saturated
the Staten Island markets in terms of branching. The growth occurring
on Staten Island relative to other counties in the New York City
metropolitan area has led to stronger competition, forcing the Bank to
be more price competitive in markets where the Bank has a smaller
presence. Expected erosion of the Bank's unusually high core deposit
base could squeeze the net interest margin. It is anticipated that,
over time, the net cash proceeds from conversion will be gradually
deployed into loans; however, it is anticipated that the yield-cost
spread immediately following conversion will be diminished through the
initial reinvestment into short-term securities. The proceeds
reinvestment benefit will also be impacted by the annual expense of
the stock plans, operations as a public company and data processing
<PAGE> 72
RP Financial, LC.
Page 4.5
conversion/upgrade expenses. Over the longer term, the Bank will have
greater capacity to leverage than the Peer Group, given the Bank's
higher pro forma capital position, positioning the Bank for greater
earnings growth potential, albeit such growth would be expected to be
at lower spreads.
- Return on Equity. The higher pro forma capital position will place
the Bank at a disadvantage relative to the Peer Group in terms of
return on equity, despite higher core profitability.
- Effective Tax Rate. The Bank's tax rate is expected to return to
normalized levels of approximately 47.0 percent on a pro forma basis,
which places it well above the Peer Group's average effective tax
rate.
Overall, a slight downward valuation adjustment was warranted
for profitability, growth and viability of the Bank's earnings.
3. Asset Growth
The Bank's ability to grow will on a post-conversion basis will depend
largely on the opportunity and ability to expand into new markets outside of
Staten Island. Currently, the Bank serves all major communities on Staten
Island, making future asset and deposit growth in the absence of expansion
dependent on market area growth, superior service and higher pricing. At the
same time, competition has become increasingly intense on Staten Island due to
generally favorable demographic characteristics, particularly through
consolidation of the community financial institutions by larger New York banks.
In the Bank's Brooklyn market, there has been a proliferation of ethnic banks
or banks with an ethnic emphasis seeking to serve the rapidly growing local
ethnic communities. The Bank expects that the majority of future deposit
growth will be outside of Staten Island, an objective which may be impeded by
the Bank's current island community and presence. Thus, while the Bank may be
better capitalized to pursue growth through acquisition on a pro forma basis,
the Peer Group companies serve less isolated markets and do not share the same
level of market saturation as the Bank. Overall, we have applied a moderate
downward adjustment for this factor.
4. Primary Market Area
The general condition of an institution's market area has an impact on
value, as future success is in part dependent upon opportunities for profitable
activities in the local market
<PAGE> 73
RP Financial, LC.
Page 4.6
served. Nine of the sixteen Peer Group companies are based in New York, with
the balance being based in New Jersey. In general, the Peer Group companies
maintain operations in or near large metropolitan areas, including the New York
MSA. Accordingly, the Peer Group companies are viewed as sharing similar
market area and competitive characteristics with the Bank, and, on balance, are
subject to similar market area demographic and economic forces and trends.
However, the Bank currently is largely a captive of the Staten Island
community, a factor which may restrict its ability to expand.
Summary demographic and deposit market share data for the Bank and
Peer Group is provided in Exhibit III-4. The Peer Group's average asset size
approximates $1.4 billion, less than the Bank's pro forma asset base of
approximately $2.1 billion. Both, however, operate substantial branch office
networks, compete with both larger and smaller financial institutions and
engage in varied lending activities.
On balance, we concluded that no adjustment was appropriate for the
Bank's market area.
5. Dividends
While the Bank has not indicated its intention to commence a cash
dividend at this time, the pro forma capitalization and profitability clearly
position the Bank to have the capacity to pay cash dividends comparable to the
Peer Group. Historically, thrifts typically have not established dividend
policies at the time of their conversion to stock ownership. Newly converted
institutions, in general, have preferred to gain market seasoning, establish an
earnings track record and fully invest the conversion proceeds before
establishing a dividend policy. However, during the late 1980s and early
1990s, with negative publicity surrounding the thrift industry, there was a
tendency for more thrifts to initiate moderate dividend policies concurrent
with their conversion as a means of increasing the attractiveness of the stock
offering. Today, fewer institutions are compelled to initially establish
dividend policies at the time of their conversion offering as (1) industry
profitability has improved, (2) the number of problem thrift institutions has
declined, and (3) the stock market cycle for thrift stocks is generally more
favorable than in the early-1990s. At the same time, with ROE ratios under
pressure, due to high equity levels, well-capitalized institutions are subject
to increased competitive pressures to offer dividends.
<PAGE> 74
RP Financial, LC.
Page 4.7
As publicly-traded thrifts' capital levels and profitability have
improved and as weakened institutions have been resolved, the proportion of
institutions with cash dividend policies has increased. All 16 institutions in
the Peer Group presently pay regular cash dividends, with implied dividend
yields ranging from 0.7 percent to 3.4 percent. The average dividend yield on
the stocks of the Peer Group institutions was approximately 1.9 percent as of
July 17, 1997, representing an average payout ratio of approximately 32.2
percent of core earnings. As of July 17, 1997, approximately 82 percent of all
publicly-traded thrifts had adopted cash dividend policies (see Exhibit IV-1),
exhibiting an average yield of 1.79 percent and an average payout ratio of
28.95 percent. The dividend paying thrifts generally maintain higher than
average profitability ratios, facilitating their ability to pay cash dividends,
which supports a market pricing premium on average relative to non-dividend
paying thrifts.
Given the Bank's capacity to pay a dividend comparable to the Peer
Group based on pro forma capitalization and profitability, and since no
regulatory hurdle exists, we have applied no adjustment for this factor despite
no initial dividend policy.
6. Liquidity of the Shares
The Peer Group is by definition composed of companies that are traded
in the public markets, all of which trade on the NASDAQ system. Typically, the
number of shares outstanding and market capitalization provides an indication
of how much liquidity there will be in a particular stock. The market
capitalization of the Peer Group companies ranged from $54 million to $543
million as of July 17, 1997, with an average market value of $235 million. The
shares outstanding of the Peer Group members ranged from 2.4 million to 17.6
million, with an average of approximately 8.0 million. The Bank's pro forma
market value is expected to fall in the upper end of the range of market
capitalizations exhibited by the Peer Group companies. The number of shares is
expected to exceed the high end of the Peer Group range due to the anticipated
offer price per share. Overall, since relatively liquid companies comprise the
Peer Group, no adjustment was considered necessary for this factor.
7. Marketing of the Issue
Three separate markets exist for thrift stocks: (1) the after-market
for public companies, in which trading activity is regular and investment
decisions are made based upon financial
<PAGE> 75
RP Financial, LC.
Page 4.8
condition, earnings, capital, ROE and dividends; (2) the new issue market in
which converting thrifts are evaluated on the basis of the same factors but on
a pro forma basis without the benefit of a stock trading history and reporting
quarterly operating results as a publicly-held company; and (3) the thrift
acquisition market. All three of these markets were considered in the
valuation of the Bank's to-be-issued stock.
A. The Public Market
The value of publicly-traded thrift stocks is easily
measurable, and is tracked by most investment houses and related organizations.
Exhibit IV-1 provides pricing and financial data on all publicly-traded
thrifts. In general, thrift stock values react to market stimuli such as
interest rates, inflation, perceived industry health, projected rates of
economic growth, regulatory issues and stock market conditions in general.
Exhibit IV-2 displays historical stock market trends for various indices and
includes historical stock price index values for thrifts and commercial banks.
Exhibit IV-3 displays historical stock price indices for thrifts only.
In terms of assessing general stock market conditions, the
stock market has generally trended higher over the past year. Expectations
that the Federal Reserve would not tighten interest rates at its July 1996
meeting provided for a rally in the bond market in early-July, as the 30-year
bond yield moved back below 7.0 percent. The positive interest rate outlook
also served to boost the stock market, but the rally was cut short by a larger
than expected drop in June unemployment. Bond and stock prices tumbled
following the June unemployment report, as highlighted by a 115 point one-day
decline in the DJIA and an increase in the 30-year bond yield to 7.18 percent.
The release of second quarter earnings reports provided for a volatile stock
market in mid-July, especially among the technology stocks. Overall, the stock
market declined due to earnings disappointments, with a more severe decline
occurring in the technology driven NASDAQ Composite Index. At the same time
bond prices recovered, as the 30-year bond yield dropped below 7.0 percent
following statements by the Federal Reserve Chairman which indicated he
expected the economy to slow down in the second half of 1996. Stocks and bonds
rallied in late-July and early-August, as economic data indicated a healthy but
moderating economy. However, higher interest rates pushed stocks lower in
late-August, reflecting increasing expectations that the Federal Reserve would
tighten interest rates in September. The decline in the stock market was
reversed in early-September, as investors
<PAGE> 76
RP Financial, LC.
Page 4.9
reacted positively to the inflation data contained in the August employment
report. Oil stocks sustained the upward trend in the stock market in
early-September, as renewed tension between the U.S. and Iraq pushed crude oil
prices to their highest level in five years. Both bond and stock prices surged
higher in mid-September, as most of the economic data for August indicated that
the economy was slowing down and investors became more optimistic that the
Federal Reserve would not raise interest rates in September.
The Federal Reserve's decision not to raise interest rates at
its September 1996 meeting, and generally healthy third quarter earnings
results sustained the upward momentum in the stock market during the beginning
of the fourth quarter. Favorable inflation data and lower interest rates
further spurred the upward trend in the stock market prior to the election.
Investors were cheered by the "status quo" election results, as stocks rallied
strongly immediately following the election with the DJIA posting ten
consecutive advances through mid-November. Economic stability and a rising
bond market sustained the stock market rally through the end of November. For
the entire month of November, the DJIA increased 492.3 points, or 8.2 percent.
Following the rapid rise in the stock market during November, stocks retreated
during the first half of December. Profit taking, concern about speculative
excesses in the stock market and higher interest rates all contributed to the
decline in the stock market.
The stock market resumed an upward trend during the end of
1996 and the first three weeks of 1997, with the DJIA establishing several new
highs in the process. Factors contributing to the rally in the stock market
included the Federal Reserve's decision to leave rates unchanged at its
December meeting, economic data which reflected moderate growth and low
inflation, and favorable fourth quarter earnings particularly in the technology
sector. However, a disappointing fourth quarter earnings report by IBM ignited
a sell-off in the stock market in late-January. Higher interest rates extended
the downturn, as the 30-year bond approached 7.0 percent at the end of January.
A high degree of market volatility was evident throughout most of February
1997, reflecting concern over speculative excesses in the stock market;
particularly, as the DJIA closed above the 7000 mark in mid-February. Profit
taking, growing expectations of a correction and comments by the Federal
Reserve Chairman pulled the market lower in late-February.
<PAGE> 77
RP Financial, LC.
Page 4.10
Following a downturn in late-February 1997, the market
recovered in early-March. Despite increasing expectations of an interest rate
hike by the Federal Reserve, the Dow Jones Industrial Average ("DJIA") closed
to a new record high of 7085.16 on March 11, 1997. However, an upward revision
to the January retail sales figure triggered a one day sell-off in stocks and
bonds on March 13, 1997, as the stronger than expected growth heightened
expectations of an interest rate increase by the Federal Reserve. Unease over
higher interest rates, profitability concerns in the technology sector and
litigation concerns for tobacco stocks pulled the stock market lower in
mid-March 1997. As expected, the Federal Reserve increased the rate on
short-term funds by 0.25 percent at its late-March 1997 meeting. Following the
rate increase, the sell-off in the stock market became more severe amid further
signs of an accelerating economy. Stocks bottomed-out on news of a stronger
than expected rise in core producer prices for March, with the DJIA closing at
6391.69 on April 11, 1997, or 9.8 percent below its all-time high recorded a
month ago.
Some favorable first quarter earnings reports and news of a
possible settlement by tobacco companies to resolve the threat of liability
lawsuits provided for a modest recovery in the stock market in mid-April 1997.
In late-April 1997, the release of economic data which indicated mild
inflationary pressures furthered the rally in bond and stock prices. News of a
budget agreement and a favorable ruling for tobacco companies sent the stock
market soaring to record highs in early-May 1997. Mixed economic data and the
Federal Reserve's decision to leave its target for the federal-funds rate
unchanged at its May meeting sustained a positive trend in the stock market
through the end of May 1997. Profit worries caused a sell-off in
high-technology stocks in early-June, while declining interest rates served to
stabilize the broader market. The Fed's decision to leave rates unchanged at
the July 2 meeting, as well as new economic data that indicated inflation was
still under control, including a rise in the June unemployment rate, provided
for positive trends in the stock and bond markets in early-July. Technology
stocks rallied the stock market new highs in mid-July, as a number of
technology companies posted favorable second quarter earnings. On July 17,
1997, the DJIA closed at 8020.8, translating into an increase of 46.8 percent
from a year ago.
Similar to the overall stock market, the market for thrift
stocks has generally been favorable during the past twelve months. The Supreme
Court's ruling in favor of thrifts seeking
<PAGE> 78
RP Financial, LC.
Page 4.11
damages for goodwill served to boost thrift prices in the beginning of July
1996, but the upturn was abbreviated by a sharp increase in interest rates.
The sharp rise in interest rates, which was prompted by the stronger than
expected June unemployment report, pushed interest-rate sensitive issues in
general lower. Generally favorable second quarter earnings and lower interest
rates supported a modest recovery in thrift prices in mid-July, although
concerns about future interest rate trends moderated the impact of the healthy
second quarter earnings. Lower interest rates and the announced acquisitions
of two large California thrifts, American Savings with $20 billion in assets
and CalFed Bancorp with $14 billion in assets, pushed the SNL Index higher in
late-July and through mid-August 1996. Thrift stocks settled into a narrow
trading range in late-August and early-September 1996, as higher interest rates
dampened interest in the thrift sector. For the balance of September, trading
activity in thrift stocks was somewhat mixed. Higher thrift prices were
recorded in mid-September 1996, as the yield on the 30-year U.S. Treasury bond
briefly dropped below 7.0 percent. However, the rally in financial services
stocks faltered in late-September 1996, reflecting renewed fears about higher
interest rates and rising bad debt on credit cards.
Thrift prices generally moved higher during October and
November 1996. The upward trend in thrift prices was supported by lower
interest rates, with the slow down in economic growth pushing the 30-year U.S.
bond rate below 6.5 percent during the second half of November 1996. Investors
also reacted positively to the SAIF rescue legislation, in light of the
reduction in deposit insurance premiums to be paid by SAIF-insured thrifts
following the one time special assessment. Similar to the overall stock
market, thrift prices traded lower in early-December 1996. Profit taking and
expectations of higher interest rates were factors contributing to the pull
back in thrift issues.
Bullish sentiment for thrift stocks heightened at the
beginning of 1997, as investors reacted positively to the favorable inflation
data and generally strong fourth quarter earnings. The rally in thrift issues
was driven by the large California institutions, reflecting expectations that
there would be further consolidation among the large California thrifts. The
acquisition speculation for the large California thrifts became a reality in
mid-February, as H.F. Ahmanson's unsolicited offer to acquire Great Western
Financial sent the SNL Index soaring in mid-February. Stable interest rates
and acquisition activity supported higher thrift prices in
<PAGE> 79
RP Financial, LC.
Page 4.12
early-March, with the SNL Index posting a new high of 579.1 on March 11, 1997.
Like the stock market in general, the peak in thrift prices was followed by a
sharp sell-off in mid-March 1997. In fact, interest-rate sensitive issues were
among the sectors hardest hit by the revised January 1997 retail sales report,
as the 30-year bond approached 7.0 percent. Interest-rate sensitive issues
continued to experience selling pressure in late-March and early-April 1997, as
signs of a strengthening economy pushed interest rates higher. The sell-off in
thrift stocks culminated on April 11, 1997, as interest rates increased sharply
on news of the higher than expected rise in core producer prices for March.
Thrift prices edged modestly higher in mid-April 1997, reflecting generally
favorable first quarter earnings and a slight decline in interest rates
following the release of economic data which showed that inflation was low.
Favorable inflation data and the budget agreement provided for a more
substantial rally in thrift stocks in late-April and early-May 1997, as
interest-rate sensitive issues were bolstered by a decline in interest rates.
Thrift stocks continued to trend higher through June and early July, based on
the improved interest-rate outlook and an overall positive outlook for the
economy. Generally favorable second quarter earnings and the 30-year U.S.
Treasury bond yield declining below 6.50 percent served to further boost thrift
prices in mid-July. The SNL Index for all publicly-traded thrifts closed at
652.4 on July 17, 1997, an increase of 71.4 percent from one year ago, while
the industry price/tangible book has increased by nearly 25 percent.
B. The New Issue Market
In addition to thrift stock market conditions in general, the
new issue market for converting thrifts is also an important consideration in
determining the Bank's pro forma market value. Interest in converting thrift
issues receded somewhat in the second quarter of 1996, as indicated by fewer
oversubscriptions and generally weak aftermarket trading performance. However,
interest returned to converting issues during the second half of 1996, as most
offerings experienced healthy oversubscriptions. Fewer offerings, more
attractive pricing, lower interest rates, and the general positive trend in
thrift prices were among the most prominent factors contributing to the renewed
investor interest shown for converting thrift issues. The favorable market
environment for converting thrift issues was sustained during the first quarter
of 1997. Market interest for converting thrift issues became very strong in
the latter part of the second quarter of 1997, with the seven standard
conversion issues that began trading since late June
<PAGE> 80
RP Financial, LC.
Page 4.13
1997 increasing by an average of 53.5 percent on the first day of trading,
partially reflecting general exuberant stock market trends and overall investor
enthusiasm for initial public offerings (including non-financial services
companies). As shown in Table 4.1, the median one week change in price for
standard conversion offerings completed during the latest three month period
ending July 17, 1997 equaled positive 44 percent. The median pro forma
price/tangible book and price/earnings ratios of the recent conversions,
excluding second step conversions, was 71.4 percent and 17.3 times, generally
reflecting closing at supermaximum values. During the past 13 months 2
relatively large New York institutions have completed their conversions, Roslyn
Bancorp (January 1997) and Dime Community Bancorp (June 1996). Dime Community
closed its oversubscribed offering at the $145.5 million supermaximum, 80.3
percent P/TB, while Roslyn closed its oversubscribed offering at the $436.4
million supermaximum, 73.8 percent P/TB; the first week price appreciation
approximated 20 percent for Dime Community and nearly 60 percent for Roslyn.
In examining the current pricing characteristics of
institutions completing their conversions during the last three months (see
Table 4.2), we note there exists a considerable difference in pricing ratios
compared to the universe of all publicly-traded thrifts with the premium
earnings multiples leading to discounted book multiples. The current average
P/B ratio of the conversions completed in the most recent three month period of
111.54 percent reflects a discount of 23.55 percent from the average 135.09
percent P/B ratio of all publicly-traded thrifts (SAIF and BIF insured). The
pricing ratios of the better capitalized but lower earning recently converted
thrifts (with resulting lower return on equity measures) suggest that the
investment community has determined to discount their stocks on a book basis
until the earnings improve through redeployment and leveraging of the proceeds
over the longer term.
C. The Acquisition Market
Also considered in the valuation was the potential impact on
the Bank's stock price of recently completed and pending acquisitions of other
thrifts operating in the Bank's market area. As shown in Exhibit IV-4, there
were 12 publicly-traded New York thrifts acquired since 1995, and 3
acquisitions are currently pending of publicly-traded New York thrifts. The
Bank's larger size and relatively high pro forma capital position may tend to
lessen acquisition speculation in the Bank's stock, based on expectations that
an acquiror would be reluctant to pay
<PAGE> 81
RC Financial, LC.
TABLE 4.1
RECENT CONVERSIONS PRICING:
LAST 3 MONTHS NATIONALLY AND LAST 3 YEARS IN NEW YORK
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Institutional Information Pre-Conversion Data Offering Information
--------------------------------
Financial Info. Asset Quality
- ---------------------------------------------------------------------------------------------------------------------------------
Conversion Equity/ NPAs/ Res. Gross % of Exp./
Institution State Date Ticker Assets Assets Assets Cov. Proc. Mid. Proc.
- ----------- ----- ---- ------ ------ ------ ------ ---- ----- ---- -----
($Mil) (%) (%)(2) (%) ($Mil.) (%) (%)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LAST 3 MONTHS NATIONALLY
FirstSpartan Fin. Corp. SC * 07/09/97 FSPT $ 388 11.81% 0.75% 44% $88.6 132% 1.6%
GSB Financial Corp. NY 07/09/97 GOSB 96 12.68% 0.07% 188% 22.5 132% 4.1%
FirstBank Corp. ID * 07/02/97 FBNW 138 8.00% 0.99% 68% 19.8 132% 3.5%
Montgomery Fin. Corp.(8) IN 07/01/97 MONT 94 9.83% 0.91% 20% 11.9 132% 4.5%
Community First Bnkg.Corp. GA 07/01/97 CFBC 366 7.02% 1.68% 40% 48.3 132% 2.9%
First Robinson Fin. Corp. IL 06/30/97 FRFC 72 6.78% 0.63% 89% 8.6 132% 4.7%
Security Bancorp TN 06/30/97 P. Sheet 46 5.46% 0.06% NM 4.4 132% 6.9%
Sistersville Bancorp WV 06/26/97 P. Sheet 27 17.91% 0.31% 198% 6.6 110% 6.8%
SFB Bancorp TN 05/30/97 P. Sheet 47 10.04% 0.80% 82% 7.7 132% 3.2%
Rocky Ford Financial CO 05/22/97 P. Sheet 21 13.92% 0.00% NA 4.2 132% 8.3%
HCB Bancshares AR 05/07/97 HCBB 176 7.81% 0.21% 110% 26.5 132% 2.8%
Peoples Sidney Fin. Corp. OH 04/28/97 PSFC 92 10.08% 1.11% 33% 17.9 132% 3.2%
AVERAGES: $ 130 10.11% 0.63% 73% $22.3 130% 4.4%
AVERAGES, EXCLUDING 2ND STEPS: $ 133 10.14% 0.60% 95% $23.2 130% 4.4%
MEDIANS: $ 93 9.93% 0.69% 75% $14.9 132% 3.8%
MEDIANS, EXCLUDING 2ND STEPS: $ 92 10.04% 0.63% 82% $17.9 132% 3.5%
LAST 3 YEARS IN NEW YORK
GSB Financial Corp. NY 07/09/97 GOSB $ 96 12.68% 0.07% 188% $22.5 132% 4.1%
Roslyn Bancorp(1) NY 01/13/97 RSLN $1,973 11.55% 0.82% 137% 436.4 132% 2.1%
AFSALA Bancorp NY 10/01/96 AFED $ 137 6.08% 0.56% 105% 14.5 132% 4.9%
Dime Community Bancorp NY 06/26/96 DIME $1,094 7.46% 0.75% 77% 145.5 132% 2.5%
Catskill Financial Corp. NY 04/18/96 CATB $ 231 12.75% 0.70% 112% 56.7 132% 3.3%
Yonkers Financial Corp. NY 04/18/96 YFCB $ 210 7.72% 1.73% 23% 35.7 132% 2.7%
Peekskill Financial Corp. NY 12/29/95 PEEK $ 155 13.90% 1.30% 24% 41.0 132% 2.4%
Ambanc Holding Co. NY 12/27/95 AHCI $ 342 8.17% 3.52% 24% 54.2 132% 3.4%
Flushing Financial Corp. NY 11/21/95 FFIC $ 604 7.69% 1.08% 80% 99.2 132% 2.3%
Tappan Zee Financial NY 10/05/95 TPNZ $ 95 8.72% 2.40% 30% 16.2 132% 5.1%
SFS Bancorp NY 06/30/95 SFED $ 154 6.66% 1.41% 44% 15.0 115% 4.7%
Carver FSB NY 12/25/94 CARV $ 309 4.50% 0.93% 45% 23.1 132% 5.2%
Financial Bancorp NY 08/17/94 FIBC $ 158 6.51% 3.39% 18% 21.9 175% 7.2%
AVERAGES: $ 428 8.80% 1.44% 70% $75.5 134% 3.8%
MEDIANS: $ 210 7.72% 1.08% 45% $35.7 132% 3.4%
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Institutional Information Insider Purchases Pro Forma Data
--------------------------
Pricing Ratios(4)
- ---------------------------------------------------------------------------------------------------------------------
Benefit Plans
-------------
Conversion Recog. Mgmt.& Core
Institution State Date Ticker ESOP Plans Dirs. P/TB P/E(5) P/A
- ----------- ----- ---- ------ ---- ----- ------ ---- ------ ---
(%) (%) (%)(3) (%) (x) (%)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
LAST 3 MONTHS NATIONALLY
FirstSpartan Fin. Corp. SC * 07/09/97 FSPT 8.0% 4.0% 1.5% 72.4% 17.3 19.1%
GSB Financial Corp. NY 07/09/97 GOSB 8.0% 4.0% 2.6% 72.5% 22.5 19.6%
FirstBank Corp. ID * 07/02/97 FBNW 8.0% 4.0% 8.2% 71.4% 22.8 12.9%
Montgomery Fin. Corp.(8) IN 07/01/97 MONT 8.0% 4.0% 4.6% 89.1% 24.1 16.0%
Community First Bnkg.Corp. GA 07/01/97 CFBC 8.0% 4.0% 1.0% 72.3% 24.5 11.9%
First Robinson Fin. Corp. IL 06/30/97 FRFC 8.0% 4.0% 9.8% 71.4% 16.7 10.9%
Security Bancorp TN 06/30/97 P. Sheet 8.0% 4.0% 2.0% 72.0% 14.1 8.8%
Sistersville Bancorp WV 06/26/97 P. Sheet 8.0% 4.0% 5.4% 65.0% 18.9 20.6%
SFB Bancorp TN 05/30/97 P. Sheet 8.0% 4.0% 5.3% 70.1% 13.9 14.5%
Rocky Ford Financial CO 05/22/97 P. Sheet 8.0% 4.0% 23.6% 67.9% 14.6 17.7%
HCB Bancshares AR 05/07/97 HCBB 8.0% 4.0% 4.3% 72.9% 34.4 13.3%
Peoples Sidney Fin. Corp. OH 04/28/97 PSFC 8.0% 4.0% 9.8% 71.0% 13.7 16.5%
AVERAGES: 8.0% 4.0% 6.5% 72.3% 19.8 15.2%
AVERAGES, EXCLUDING 2ND STEPS: 8.0% 4.0% 6.7% 70.8% 19.4 15.1%
MEDIANS: 8.0% 4.0% 5.0% 71.7% 18.1 15.2%
MEDIANS, EXCLUDING 2ND STEPS: 8.0% 4.0% 5.3% 71.4% 17.3 14.5%
LAST 3 YEARS IN NEW YORK
GSB Financial Corp. NY 07/09/97 GOSB 8.0% 4.0% 2.6% 72.5% 22.5 19.6%
Roslyn Bancorp(1) NY 01/13/97 RSLN 8.0% 4.0% 1.3% 73.8% 15.3 18.6%
AFSALA Bancorp NY 10/01/96 AFED 8.0% 4.0% 4.7% 71.2% 16.3 9.7%
Dime Community Bancorp NY 06/26/96 DIME 8.0% 4.0% 2.7% 80.3% 17.3 11.9%
Catskill Financial Corp. NY 04/18/96 CATB 8.0% 4.0% 2.6% 73.2% 18.4 20.4%
Yonkers Financial Corp. NY 04/18/96 YFCB 8.0% 4.0% 3.7% 76.5% 15.1 14.8%
Peekskill Financial Corp. NY 12/29/95 PEEK 8.0% 4.0% 2.0% 72.4% 15.3 21.5%
Ambanc Holding Co. NY 12/27/95 AHCI 8.0% 4.0% 0.4% 73.5% 14.8 14.0%
Flushing Financial Corp. NY 11/21/95 FFIC 8.0% 4.0% 1.4% 75.4% 17.2 14.2%
Tappan Zee Financial NY 10/05/95 TPNZ 8.0% 4.0% 2.2% 74.7% 14.6 15.0%
SFS Bancorp NY 06/30/95 SFED 8.0% 4.0% 10.7% 65.8% 14.1 9.0%
Carver FSB NY 12/25/94 CARV 8.0% 3.0% 0.7% 73.9% 42.1 7.0%
Financial Bancorp NY 08/17/94 FIBC 7.0% 3.0% 5.6% 76.9% 13.8 12.2%
AVERAGES: 7.9% 3.8% 3.1% 73.9% 18.2 14.5%
MEDIANS: 8.0% 4.0% 2.6% 73.8% 15.3 14.2%
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Institutional Information Pro Forma Data Post-IPO Pricing Trends
------------------------- -----------------------------
Financial Charac. Closing Price:
- ----------------------------------------------------------------------------------------------------------------------------------
First After
Conversion IPO Trading % First
Institution State Date Ticker ROA TE/A ROE Price Day Change Week(6)
- ----------- ----- ---- ------ --- ---- --- ----- -------- ------ -------
(%) (%) (%) ($) ($) (%) ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
LAST 3 MONTHS NATIONALLY
FirstSpartan Fin. Corp. SC * 07/09/97 FSPT 1.1% 26.3% 4.2% $20.00 $36.69 83.4% $36.62
GSB Financial Corp. NY 07/09/97 GOSB 0.9% 27.1% 3.2% 10.00 14.63 46.3% 14.75
FirstBank Corp. ID * 07/02/97 FBNW 0.6% 18.0% 3.1% 10.00 15.81 58.1% 15.56
Montgomery Fin. Corp.(8) IN 07/01/97 MONT 0.7% 17.9% 3.7% 10.00 11.13 11.2% 11.25
Community First Bnkg.Corp. GA 07/01/97 CFBC 0.5% 16.4% 3.0% 20.00 31.88 59.4% 33.00
First Robinson Fin. Corp. IL 06/30/97 FRFC 0.7% 15.2% 4.3% 10.00 14.50 45.0% 14.38
Security Bancorp TN 06/30/97 P. Sheet 0.6% 12.2% 5.1% 10.00 14.50 45.0% 15.00
Sistersville Bancorp WV 06/26/97 P. Sheet 1.1% 31.6% 3.4% 10.00 13.75 37.5% 13.88
SFB Bancorp TN 05/30/97 P. Sheet 1.0% 20.7% 5.0% 10.00 13.81 38.1% 13.38
Rocky Ford Financial CO 05/22/97 P. Sheet 1.2% 26.1% 4.7% 10.00 13.00 30.0% 13.13
HCB Bancshares AR 05/07/97 HCBB 0.4% 18.2% 2.1% 10.00 12.63 26.3% 12.69
Peoples Sidney Fin. Corp. OH 04/28/97 PSFC 1.2% 23.3% 5.2% 10.00 12.56 25.6% 13.25
AVERAGES: 0.8% 21.1% 3.9% $11.67 $17.07 42.2% $17.24
AVERAGES, EXCLUDING 2ND STEPS: 0.8% 21.4% 3.9% $11.82 $17.61 45.0% $16.64
MEDIANS: 0.8% 19.5% 3.9% $10.00 $14.16 41.5% $14.13
MEDIANS, EXCLUDING 2ND STEPS: 0.9% 20.7% 4.2% $10.00 $14.50 45.0% $14.38
LAST 3 YEARS IN NEW YORK
GSB Financial Corp. NY 07/09/97 GOSB 0.9% 27.1% 3.2% $10.00 $14.63 46.3% $14.75
Roslyn Bancorp(1) NY 01/13/97 RSLN 1.2% 25.2% 4.8% 10.00 15.00 50.0% 15.88
AFSALA Bancorp NY 10/01/96 AFED 0.6% 13.7% 4.4% 10.00 11.38 13.8% 11.31
Dime Community Bancorp NY 06/26/96 DIME 0.7% 16.9% 4.7% 10.00 12.00 20.0% 12.00
Catskill Financial Corp. NY 04/18/96 CATB 1.1% 27.8% 4.0% 10.00 10.38 3.8% 10.50
Yonkers Financial Corp. NY 04/18/96 YFCB 1.0% 19.4% 5.1% 10.00 9.75 -2.5% 10.00
Peekskill Financial Corp. NY 12/29/95 PEEK 1.4% 29.8% 4.7% 10.00 12.125 21.2% 11.75
Ambanc Holding Co. NY 12/27/95 AHCI 0.9% 19.0% 5.0% 10.00 10.00 0.0% 10.31
Flushing Financial Corp. NY 11/21/95 FFIC 0.8% 18.9% 4.4% 11.50 13.88 20.7% 14.31
Tappan Zee Financial NY 10/05/95 TPNZ 1.0% 20.1% 5.1% 10.00 11.625 16.3% 11.50
SFS Bancorp NY 06/30/95 SFED 0.6% 13.6% 4.7% 10.00 11.50 15.0% 11.38
Carver FSB NY 12/25/94 CARV 0.2% 9.5% 1.8% 10.00 7.78 -22.2% 7.88
Financial Bancorp NY 08/17/94 FIBC 0.9% 15.9% 5.6% 10.00 10.88 8.7% 10.94
AVERAGES: 0.9% 19.8% 4.4% $10.12 $11.61 14.7% $11.73
MEDIANS: 0.9% 19.0% 4.7% $10.00 $11.50 15.0% $11.38
- ----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------
Institutional Information Post-IPO Pricing Trends
-----------------------------
Closing Price:
- -----------------------------------------------------------------------------------------------
After
Conversion % First %
Institution State Date Ticker Change Month(7) Change
- ----------- ----- ---- ------ ------ -------- ------
(%) ($) (%)
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LAST 3 MONTHS NATIONALLY
FirstSpartan Fin. Corp. SC * 07/09/97 FSPT 83.1% $36.69 83.4%
GSB Financial Corp. NY 07/09/97 GOSB 47.5% 14.75 47.5%
FirstBank Corp. ID * 07/02/97 FBNW 55.6% 17.00 70.0%
Montgomery Fin. Corp.(8) IN 07/01/97 MONT 12.5% 11.37 13.7%
Community First Bnkg.Corp. GA 07/01/97 CFBC 65.0% 34.75 73.8%
First Robinson Fin. Corp. IL 06/30/97 FRFC 43.8% 14.75 47.5%
Security Bancorp TN 06/30/97 P. Sheet 50.0% 14.75 47.5%
Sistersville Bancorp WV 06/26/97 P. Sheet 38.8% 14.25 42.5%
SFB Bancorp TN 05/30/97 P. Sheet 33.8% 14.00 40.0%
Rocky Ford Financial CO 05/22/97 P. Sheet 31.3% 13.50 35.0%
HCB Bancshares AR 05/07/97 HCBB 26.9% 12.88 28.8%
Peoples Sidney Fin. Corp. OH 04/28/97 PSFC 32.5% 12.88 28.8%
AVERAGES: 43.4% $17.63 46.5%
AVERAGES, EXCLUDING 2ND STEPS: 43.8% $15.86 44.3%
MEDIANS: 41.3% $14.50 45.0%
MEDIANS, EXCLUDING 2ND STEPS: 43.8% $14.75 47.5%
LAST 3 YEARS IN NEW YORK
GSB Financial Corp. NY 07/09/97 GOSB 47.5% $14.75 47.5%
Roslyn Bancorp(1) NY 01/13/97 RSLN 58.8% 16.00 60.0%
AFSALA Bancorp NY 10/01/96 AFED 13.1% 12.13 21.2%
Dime Community Bancorp NY 06/26/96 DIME 20.0% 11.87 18.7%
Catskill Financial Corp. NY 04/18/96 CATB 5.0% 10.38 3.8%
Yonkers Financial Corp. NY 04/18/96 YFCB 0.0% 9.94 -0.6%
Peekskill Financial Corp. NY 12/29/95 PEEK 17.5% 11.25 12.5%
Ambanc Holding Co. NY 12/27/95 AHCI 3.1% 9.87 -1.3%
Flushing Financial Corp. NY 11/21/95 FFIC 24.4% 14.38 25.0%
Tappan Zee Financial NY 10/05/95 TPNZ 15.0% 12.00 20.0%
SFS Bancorp NY 06/30/95 SFED 13.8% 11.25 12.5%
Carver FSB NY 12/25/94 CARV -21.2% 6.38 -36.2%
Financial Bancorp NY 08/17/94 FIBC 9.4% 10.38 3.8%
AVERAGES: 15.9% $11.58 14.4%
MEDIANS: 13.8% $11.25 12.5%
- -----------------------------------------------------------------------------------------------
</TABLE>
Note: * - Appraisal performed by RP Financial; "NT" - Not Traded; "NA" - Not
Applicable, Not Available.
(1) Non-OTS regulated thrift.
(2) As reported in summary pages of prospectus.
(3) As reported in prospectus.
(4) Does not take into account the adoption of SOP 93-6.
(5) Excludes impact of special SAIF assessment on earnings.
(6) Latest price if offering less than one week old.
(7) Latest price if offering more than one week but less than one month old.
(8) Second-step conversions.
July 17, 1997
<PAGE> 82
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.2
Market Pricing Comparatives
Prices As of July 17, 1997
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization ---------------- Pricing Ratios(3)
--------------- Core Book ---------------------------------------
Price/ Market 12-Mth Value/
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
- --------------------- -------- ------- ------- ------- ------- ------- ------- ------- -------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 21.52 143.89 1.14 15.62 21.23 135.09 16.89 139.10 18.78
Converted Last 3 Mths (no MHC) 19.66 51.59 0.62 17.06 27.46 111.54 23.06 112.08 22.65
Comparable Group
- ----------------
Converted Last 3 Mths (no MHC)
- ------------------------------
CFBC Community First Bnkg Co. of GA 34.81 84.03 0.82 27.66 NM 125.85 20.66 125.85 NM
FBNW FirstBank Corp of Clarkston WA 17.25 34.22 0.44 14.00 NM 123.21 22.22 123.21 NM
FSPT FirstSpartan Fin. Corp. of SC 36.62 162.23 1.16 27.63 NM 132.54 34.89 132.54 NM
GOSB GSB Financial Corp. of NY 14.75 33.16 0.44 13.78 28.37 107.04 28.97 107.04 NM
HCBB HCB Bancshares of AR 13.87 36.69 0.29 13.73 NM 101.02 18.43 105.40 NM
MONT Montgomery Financial Corp ofIN 11.37 18.79 0.42 11.22 NM 101.34 18.15 101.34 27.07
PHSB Peoples Home SB of PA 13.75 17.08 0.67 14.36 NM 95.75 16.57 95.75 20.52
PSFC Peoples Sidney Fin. Corp of OH 14.87 26.54 0.73 14.09 26.55 105.54 24.55 105.54 20.37
</TABLE>
<TABLE>
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ --------------- ---------------
Financial Institution Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------- ------ ------- ------ ------- ------- ------- ------- ------- -------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.38 1.78 29.11 1,113 13.05 0.78 0.62 5.31 0.85 7.36
Converted Last 3 Mths (no MHC) 0.05 0.44 0.00 222 20.57 1.00 0.57 2.59 0.76 3.65
Comparable Group
- ----------------
Converted Last 3 Mths (no MHC)
- ------------------------------
CFBC Community First Bnkg Co. of GA 0.00 0.00 0.00 407 16.42 NA 0.25 1.52 0.49 2.96
FBNW FirstBank Corp of Clarkston WA 0.00 0.00 0.00 154 18.04 NA 0.70 3.86 0.57 3.14
FSPT FirstSpartan Fin. Corp. of SC 0.00 0.00 0.00 465 26.32 NA 0.95 3.62 1.11 4.20
GOSB GSB Financial Corp. of NY 0.00 0.00 0.00 114 27.06 NA 1.02 3.77 0.86 3.19
HCBB HCB Bancshares of AR 0.00 0.00 0.00 199 18.25 NA -0.11 -0.58 0.39 2.11
MONT Montgomery Financial Corp ofIN 0.40 3.52 NM 104 17.91 NA 0.42 2.32 0.67 3.74
PHSB Peoples Home SB of PA 0.00 0.00 0.00 229 17.31 NA 0.39 2.23 0.81 4.67
PSFC Peoples Sidney Fin. Corp of OH 0.00 0.00 0.00 108 23.26 1.00 0.92 3.97 1.21 5.18
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core
earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot guarantee
the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 83
RP Financial, LC.
Page 4.16
an acquisition premium for the Bank's "excess" capital. At the same time, the
fairly active acquisition market for New York thrifts may imply a certain
degree of acquisition speculation for the Bank's stock. To the extent that
acquisition speculation may impact the Bank's offering, we have largely taken
this into account in selecting companies which operate in the same market.
Taking these factors and trends into account, primarily recent
trends in the new issue market, market conditions overall and recent trends in
the acquisition market, RP Financial concluded that no adjustment was
appropriate in the valuation analysis for purposes of marketing of the issue.
8. Management
The Bank's management team appears to have experience and expertise in
the key areas of the Bank's operations. Exhibit IV-5 provides summary resumes
of the Bank's Board of Directors and executive management. The financial
characteristics and growth of the Bank suggest that the Bank is being
effectively managed and there appears to be a well-defined organizational
structure. The Bank has no apparent executive/senior management vacancies.
The location in a large metropolitan area and the compensation and benefits
available through the stock structure should facilitate the Bank's ability to
attract qualified candidates if such a need should arise.
The returns, capital positions, and other operating measures of the
Peer Group companies are indicative of well-managed financial institutions,
which also have generally seasoned Boards and management teams.
On balance, we concluded that no valuation adjustment relative to the
Peer Group was appropriate for this factor.
9. Effect of Government Regulation and Regulatory Reform
Several of the Peer Group companies' deposits were impacted by the
recently enacted SAIF rescue legislation, leading to a special assessment
during 1996 and a reduced deposit insurance premium structure beginning in
1997. Currently, there are no significant differences between the Bank and the
Peer Group from a regulatory perspective, and several of the Peer
<PAGE> 84
RP Financial, LC.
Page 4.17
Group members operate under the same regulatory scheme as the Bank. On
balance, no adjustment to the Bank's value was warranted for this factor.
Summary of Adjustments
Overall, we believe the Bank's pro forma market value should be
discounted relative to the Peer Group as follows.
<TABLE>
<S> <C>
Key Valuation Parameters Valuation Adjustment
------------------------ --------------------
Financial Condition No Adjustment
Profitability, Growth and Viability of Earnings Slight Downward
Asset Growth Moderate Downward
Primary Market Area No Adjustment
Dividends No Adjustment
Liquidity of the Shares No Adjustment
Marketing of the Issue No Adjustment
Management No Adjustment
Effect of Government Regulations and Regulatory Reform No Adjustment
</TABLE>
Valuation Approaches
In applying the accepted valuation methodology promulgated by the
regulatory agencies, i.e., the pro forma market value approach, we considered
the three key pricing ratios in valuing the Bank's to-be-issued stock --
price/earnings ("P/E"), price/book ("P/B"), and price/assets ("P/A") -- all
performed on a pro forma basis including the effects of the conversion
proceeds. In computing the pro forma impact of the conversion and the related
pricing ratios, we have incorporated the valuation parameters disclosed in the
Bank's prospectus for offering expenses, reinvestment rate, the effective tax
rate, stock benefit plans and contribution to the charitable foundation
(summarized in Exhibits IV-6 and IV-7). Each of these assumptions are
described more fully below.
- Conversion Expenses. The Bank has estimated its fixed and variable
conversion expenses over the range of value incorporating the
appraised value determined herein, based on the financial arrangements
with the various third parties engaged by the Bank to assist in
completing the conversion transaction.
- Effective Tax Rate. The Bank, in consultation with its outside
auditors, has determined the marginal effective tax rate on the net
reinvestment benefit of the
<PAGE> 85
RP Financial, LC.
Page 4.18
conversion proceeds to be 47 percent based on the statutory Federal,
state and city income tax rates.
- Reinvestment Rate. The pro forma section in the draft prospectus
incorporates a 5.89 percent reinvestment rate, equivalent to yield on
the one-year Treasury bill as of April 30, 1997, the rate utilized
herein. The reinvestment rate calculation specified in the OTS's
conversion regulations, equivalent to the arithmetic average of the
yield on interest-earning assets and cost of deposits for the most
recent fiscal year, indicates a reinvestment rate of 5.54 percent.
This calculated rate is reasonably similar to: (1) the current market
rate on short- to intermediate-term securities (i.e., 1 to 5 year
Treasury yields as of the valuation date ranged from 5.50 to 6.10
percent, respectively); and (2) the estimated 5.77 percent blended
reinvestment rate in the first 12 months of the business plan
post-conversion, reflecting the current anticipated use of conversion
proceeds, incorporating a flat rate interest rate scenario and the
estimated impact of deposit withdrawals to fund purchases equal to 15
percent of the stock issued in the conversion.
- Stock Benefit Plans. The assumptions for the stock benefit plans,
i.e., the Employee Stock Ownership Plan ("ESOP") and Recognition Plan
("Recognition Plan"), are consistent with the structure as approved by
the Bank's Board and the disclosure in the pro forma section of the
prospectus. Specifically, the ESOP is assumed to purchase 8 percent
of the stock in conversion at the initial public offering price, with
the Holding Company funded ESOP loan amortized on a straight-line
basis over 15 years. The Recognition Plan is assumed to purchase 4
percent of the stock in the aftermarket at a price equivalent to the
initial public offering price (we also considered the impact of the
issuance of Recognition Plan shares from authorized but unissued
shares at a price equivalent to the initial public offering price),
with the Recognition Plan cost expensed on a straight line basis in
conjunction with the 5 year vesting schedule.
- Contribution to Charitable Foundation. Immediately upon completion of
the stock conversion, consistent with the Plan of Conversion, the Bank
will contribute authorized but unissued shares, equal to 5 percent of
the shares issued in conversion, to a charitable foundation.
RP Financial's valuation considered each of the valuation approaches
promulgated in the regulatory valuation guidelines, as described more fully
below.
- P/E Approach. The P/E approach is generally regarded as the best
indicator of long-term value for a stock. Given the traditional
thrift operating strategies employed by the Bank and the Peer Group,
which provided a certain degree of financial comparability between the
Bank and the Peer Group, the P/E approach was carefully considered in
this valuation. Since reported earnings for both the Bank and the
Peer Group included certain unusual items, we also made adjustments to
earnings to arrive at a core earnings estimate and the resulting
price/core earnings ratio.
<PAGE> 86
RP Financial, LC.
Page 4.19
- P/B Approach. P/B ratios have generally served as a useful benchmark
in the valuation of thrift stocks, with the greater determinant of
long term value being earnings. Recognizing that the pro forma P/B
ratio will result in a below market ratio due to the pro forma nature
of the P/B computation, RP Financial considered the P/B approach to be
a reliable indicator in the context of pro forma value taking into
account the pricing ratios under the P/E and P/A approaches. We have
also modified the P/B approach to exclude the impact of intangible
assets (i.e., price/tangible book value or "P/TB"), in that the
investment community frequently makes this adjustment in its
evaluation of the stock price level.
- P/A Approach. Investors typically do not place significant weight on
simply the size of total assets as a determinant of market value
without making risk adjustments. Investors generally place greater
weight on book value and earnings for established publicly-traded
institutions. At the same time, the P/A ratio is an indicator of
franchise value, and, in the case of highly capitalized institutions,
high P/A ratios may limit the investment community's willingness to
pay market multiples for earnings or book value when ROE is expected
to be low. This approach as set forth in the regulatory valuation
guidelines, does not take into account the amount of stock purchases
funded by deposit withdrawals, thus understating the pro forma P/A
ratio.
Based on the application of the three valuation approaches, taking
into consideration the valuation adjustments discussed above, and placing the
greatest weight on the earnings and book approaches, RP Financial concluded
that the pro forma market value of the Bank's conversion stock is $325 million
at the midpoint at this time.
1. Price-to-Book ("P/B"). The application of the P/B valuation
method requires calculating the Bank's pro forma market value by applying a
valuation P/B ratio, derived from the Peer Group's P/B ratio, to the Bank's pro
forma book value. In applying the P/B approach, we considered both reported
book value and tangible book value. Based on the $325 million midpoint
valuation, the Bank's pro forma P/B and P/TB ratios were 72.10 and 75.42
percent, respectively. In comparison to the median P/B and P/TB ratios for the
Peer Group of 155.11 percent and 163.70 percent, respectively, the Bank's
ratios were discounted by 53.5 and 53.9 percent. RP Financial considered such
discounts to be reasonable in light of the previously referenced valuation
adjustments, the nature of the calculation of the pro forma P/TB ratio which
mathematically results in a ratio discounted to book value, comparatively lower
pro forma core ROE and the resulting pricing ratios under the earnings and
assets approaches.
<PAGE> 87
RP Financial, LC.
Page 4.20
2. Price-to-Earnings ("P/E"). The application of the P/E
valuation method requires calculating the Bank's pro forma market value by
applying a valuation P/E multiple, derived from the Peer Group's P/E multiple,
times the pro forma earnings base. In applying this technique, we considered
both reported earnings and a recurring earnings base, that is, earnings
adjusted to exclude any one-time non-operating and extraordinary items, plus
the estimated after-tax earnings benefit from reinvestment of net conversion
proceeds. The Bank's reported earnings were $21.795 million for the twelve
months ended April 30, 1997. In deriving the Bank's core earnings, the only
adjustments made to reported pre-tax earnings were the addback of the net loss
on sale of securities ($3.436 million), and application of the effective
statutory tax rate of 47.0 percent (to eliminate the impact of the one-time
reversal) to core pre-tax earnings. On a tax effected basis, adjusted earnings
approximated $19.703 million. Similar types of adjustments were applied to the
Peer Group in the calculation of their core earnings (Note: see Exhibit IV-8).
Based on the Bank's reported and estimated core earnings, and
incorporating the impact of the pro forma assumptions discussed previously, the
Bank's pro forma reported and core P/E multiples at the $325 million midpoint
value were 11.64 and 12.58 times, respectively, which provided for discounts of
38.7 and 16.5 percent relative to the Peer Group's median reported and core
earnings multiples of 18.99 and 15.06 times, respectively. Such adjustments
reflect the valuation adjustments outlined previously and the other pricing
ratios. We also considered the intangibles amortization in examining the
pricing ratios, as well as the Bank's recent portfolio restructuring and cost
of ongoing data processing conversion. RP Financial also considered the impact
of SOP 93-6 in examining the P/E ratios.
3. Price-to-Assets ("P/A"). The P/A valuation methodology
determines market value by applying a valuation P/A ratio to the Bank's pro
forma asset base, conservatively assuming no deposit withdrawals are made to
fund stock purchases. In all likelihood there will be deposit withdrawals,
which results in understating the pro forma P/A ratio which is computed herein.
At the midpoint of the valuation range, the Bank's value equaled 15.32 percent
of pro forma assets, compared to the Peer Group median P/A ratio of 13.07
percent, which implies a 17.2 percent premium being applied to the Bank's pro
forma P/A ratio. While generally emphasized less than the P/E and P/B
approaches, the P/A ratio is an indicator of franchise value and, thus, was
considered in the valuation conclusion.
<PAGE> 88
RP Financial, LC.
Page 4.21
Comparison to Recent Conversions
As indicated at the beginning of this chapter, RP Financial's analysis
of recent conversion pricing characteristics at conversion (excluding second
step conversions) and in the aftermarket has been limited to a "technical"
analysis and, thus, the pricing characteristics of recent conversions is not
the primary determinate of value herein. Particular focus was placed on the
P/B approach in this analysis since the P/E multiples do not reflect the actual
impact of reinvestment and the source of the conversion funds (i.e., external
funds vs. deposit withdrawals). The recent conversions (excluding second step
conversions) on average closed their offerings at their supermaximum levels
given the oversubscribed nature of their offerings and prevailing market
conditions at closing, indicating a median price/tangible book ratio of 71.4
percent. On average, the prices of recent conversions appreciated by 44
percent during the first week of trading. In comparison, the Bank's P/TB ratio
at the appraised midpoint reflects a premium relative to the closing ratios
(generally at their supermaximums), but a discount to the aftermarket ratios.
The closing and aftermarket P/TB ratios are not directly comparable in that the
closing ratio reflects the pro forma impact of conversion on equity whereas the
aftermarket ratio reflects only price (with no further impact on equity
capital).
Valuation Conclusion
It is our opinion that, as of July 17, 1997, the estimated aggregate
pro forma market value of the shares to be issued immediately following the
conversion was $325 million. Based on this valuation, the Directors of the
Company and the Bank have established the Initial Purchase Price and the number
of shares of Conversion Stock to be offered, including the range of value.
Accordingly, the Boards have established a range of value of 15 percent above
and below the appraised value of $325 million (or "midpoint"), indicating a
minimum value of $276.25 million and a maximum value of $373.75 million. Based
on the $10.00 per share offering price determined by the Boards, this valuation
range equates to an offering of 27.625 million shares at the minimum to 37.375
million shares at the maximum, and 32.5 million shares at the midpoint. In the
event that the appraised value is subject to an increase, up to 42,981,250
shares may be sold at an issue price of $10.00 per share, for an aggregate
market value of $429,812,500, without a resolicitation.
<PAGE> 89
RP Financial, LC.
Page 4.22
Based on this valuation range, incorporating the 5 percent shares
issued to Foundation following consummation of the offering, the offering range
is as follows: $263,095,240 at the minimum, $309,523,810 at the midpoint,
$355,952,380 at the maximum and $409,345,240 at the supermaximum. Based on a
$10.00 per share offering price, the number of offering shares is as follows:
26,309,524 at the minimum, 30,952,381 at the midpoint, 35,595,238 at the
maximum and 40,934,524 at the supermaximum.
The comparative pro forma valuation ratios relative to the Peer Group
are shown in Table 4.3, and the key valuation assumptions are detailed in
Exhibit IV-6. The pro forma calculations for the range are detailed in Exhibit
IV-7, and pro forma regulatory capital levels are presented in Exhibit IV-9.
<PAGE> 90
RP FINANCIAL, IC
- ---------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.3
Public Market Pricing
Staten Island Savings Bank and the Comparables
As of July, 17, 1997
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------
-------------- Core Book Pricing Ratios (3)
Price/ Market 12-Hth Value/ --------------------------------------
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
-------- ------ ------ ------ --- --- --- ---- ------
($) ($HH) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Staten Island Savings Bank
- --------------------------
Superrange 10.00 429.81 0.70 12.56 14.37 79.61 19.44 82.65 15.45
Range Maximum 10.00 373.75 0.77 13.17 12.96 75.94 17.28 79.12 13.97
Range Midpoint 10.00 125.00 0.86 13.87 11.64 72.10 15.32 75.42 12.58
Range Minimum 10.00 276.25 0.98 14.82 10.24 67.50 13.28 70.93 11.10
All Public Companies 21.91 175.86 1.18 15.58 20.05 138.35 17.01 141.92 18.38
All Non-fhic State of NY(/)
- ---------------------------
Averages 25.96 399.91 1.35 17.60 21.27 135.43 17.49 141.13 18.89
Medians -- -- -- -- 23.55 127.46 14.66 141.39 18.44
Comparable Group Averages
- -------------------------
Averages 28.63 234.77 1.85 18.25 19.02 153.26 17.42 164.79 16.12
Medians -- -- -- -- 18.99 155.11 13.07 163.70 15.06
State of NY
- -----------
ABBD AESA12 Bancorp, Inc. of NY 15.75 22.92 0.61 14.05 25.82 112.10 15.34 112.10 25.82
ABBK ALBANK Fin. Corp. of Albany NY 38.62 495.07 2.71 25.10 17.80 153.86 14.16 177.40 14.25
ABBC Albton Banc. Corp. of Albany NY 24.00 6.00 0.93 23.62 NA 101.61 9.05 101.61 25.81
AHCI Ambath Holding Co., Inc. at NY 16.00 70.27 -0.65 13.85 NA 115.52 14.70 115.52 NA
ASFC Astoria Financial Corp. of NY 46.88 983.45 2.65 27.86 26.19 168.27 12.79 202.24 17.69
CBY Carter BanCorp, Inc. of NY 12.25 28.35 -0.05 14.76 NA 82.99 6.69 86.69 NA
CATB Catskill Fin. Corp. of NY 16.00 80.43 0.85 14.70 19.05 108.84 29.36 108.84 18.82
DME Dime Bancorp, Inc. of NY 17.94 1860.72 1.36 10.16 16.92 176.57 10.08 178.33 13.19
DIME Dime Community Bancorp of NY 19.25 252.68 0.97 14.53 22.13 132.48 20.42 154.37 19.85
FIBC Financial Bancorp, Inc. of NY 18.75 32.78 1.42 14.98 24.35 125.17 12.18 125.75 13.20
FFIC Flushing Fin. Corp. of NY 20.25 163.78 0.89 16.06 23.55 126.09 20.19 126.09 22.75
GOSH GSB Financial Corp. at NY 14.75 33.16 0.44 13.78 28.37 107.04 28.97 107.04 NA
GPI GreenPoint Fin. Corp. of NY 63.25 2849.03 2.93 31.81 19.70 198.84 21.48 NA 21.59
HAVB Haven Bancorp of Woodhaven NY 37.25 161.29 3.32 23.13 16.34 161.05 9.34 161.68 11.22
JSBF JSB Financial, Inc. of NY 44.00 432.52 2.62 34.52 15.94 127.46 28.25 127.46 16.79
LISB Long Island Bancorp, Inc of NY 35.19 852.58 1.64 21.62 25.50 162.77 14.66 164.36 21.46
MBB MSB Bancorp of Middletown NY 22.25 63.12 0.48 19.72 NA 112.83 7.79 NA NA
MVB New York Bancorp, Inc. of NY 39.56 640.60 2.85 9.92 16.35 NA 20.18 NA 13.88
PEEK Peekskill Fin. Corp. of NY 15.37 49.23 0.81 14.58 24.40 105.42 26.96 105.42 18.98
PKPS Pudghkeepsle Fin. Corp. of NY 8.13 102.40 0.32 5.75 NA 141.39 11.89 141.39 25.41
PSBK Progressive Bank, Inc. of NY 29.75 113.79 2.50 19.17 12.00 155.19 12.97 175.21 11.90
QCSB Queens County Bancorp of NY 48.75 542.93 2.07 18.47 23.78 NA 39.53 NA 23.55
RCSB RCSB Financial, Inc. Of NY(7) 48.50 707.66 2.64 21.69 18.23 223.61 17.55 229.42 18.37
RELY Reliance Bancorp, Inc. of NY 28.75 253.66 1.76 17.56 24.78 263.72 13.17 233.55 16.34
<CAPTION>
Dividends(4) Financial Characteristics
----------------------- -------------------------------------------------------
Reported Core
----------- -----------
Amount/ Payout Total Equity/ NPAs/
Share Yield Ratio(5) Assets Assets Assets ROA RDE ROA RDE
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
------- ------ -------- ------ ------- ------ --- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Staten Island Savings Bank
- --------------------------
Superrange 0.00 0.00 0.00 2,211 24.42 1.16 1.35 5.54 1.26 5.15
Range Maximum 0.00 0.00 0.00 2,163 22.75 1.19 1.33 5.88 1.24 5.44
Range Midpoint 0.00 0.00 0.00 2,122 21.24 1.21 1.32 6.19 1.22 5.73
Range Minimum 0.00 0.00 0.00 2,080 19.67 1.24 1.30 6.59 1.20 6.08
All Public Companies 0.39 1.79 28.95 1,275 12.87 0.82 0.68 6.11 0.88 7.85
All Non-fhic State of NY(/)
- ---------------------------
Averages 0.44 1.57 28.54 2,485 12.63 1.17 0.69 6.27 0.85 7.83
Medians -- -- -- -- -- -- -- -- -- --
Comparable Group Averages
- -------------------------
Averages 0.56 1.91 32.15 1,376 11.16 0.70 0.83 8.23 1.06 10.63
Medians -- -- -- -- -- -- -- -- -- --
State of NY
- -----------
ABBD AESA12 Bancorp, Inc. of NY 0.16 1.02 26.23 149 13.68 NA 0.59 4.34 0.59 4.34
ABBK ALBANK Fin. Corp. at Albany NY 0.60 1.55 22.14 3,496 9.20 0.92 0.81 8.74 1.01 10.91
ABBC Albton Banc. Corp. of Albany NY 0.31 1.29 33.33 66 8.90 NA 0.09 0.93 0.38 3.93
AHCI Ambath Holding Co., Inc. at NY 0.00 0.00 NA 478 12.72 1.06 -0.62 -4.16 -0.62 -4.16
ASFC Astoria Financial Corp. of NY 0.60 1.28 22.64 7,689 7.60 0.52 0.52 6.53 0.77 9.67
CBY Carter BanCorp, Inc. of NY 0.20 1.63 NA 424 8.06 1.53 -0.47 -5.07 -0.03 -0.33
CATB Catskill Fin. Corp. of NY 0.28 1.75 32.94 274 26.98 0.50 1.42 6.14 1.44 6.22
DOE Disc Bancorp, Inc. of NY 0.00 0.00 0.00 18,465 5.71 2.36 0.57 10.83 0.73 13.89
DIME Dime Community Bancorp of NY 0.18 0.94 18.56 1,237 15.41 0.82 0.93 6.19 1.03 6.90
FIBC Financial Bancorp, Inc. of NY 0.40 2.13 28.17 269 9.73 2.77 0.51 5.14 0.95 9.49
FFIC Flushing Fin. Corp. of NY 0.24 1.19 26.97 811 16.01 0.27 0.90 5.16 0.93 5.34
GOSH GSB Financial Corp. at NY 0.00 0.00 0.00 114 27.06 NA 1.02 3.77 0.86 3.19
GPF GreenPoint Fin. Corp. of NY 1.00 1.58 34.13 13,261 10.80 2.84 1.05 9.89 0.96 9.03
HAVB Haven Bancorp of Woodhaven NY 0.60 1.61 18.07 1,728 5.80 0.78 0.62 10.26 0.91 14.94
JSBF JSB Financial, Inc. of NY 1.40 3.18 53.44 1,531 22.17 1.08 1.78 8.11 1.69 7.69
LISB Long Island Bancorp, Inc of NY 0.60 1.71 36.59 5,814 9.01 1.04 0.62 6.41 0.74 7.62
MBB MSB Bancorp of Middletown NY 0.60 2.70 NA 811 5.90 0.70 0.15 2.23 0.17 2.43
MVB New York Bancorp, Inc. of NY 0.80 2.02 28.07 3,175 5.06 1.29 1.31 24.82 1.55 29.23
PEEK Peekskill Fin. Corp. of NY 0.36 2.34 44.44 183 25.57 1.23 1.07 3.74 1.38 4.81
PKPS Pudghkeepsle Fin. Corp. of NY 0.10 1.23 31.25 861 8.41 4.21 0.21 2.47 0.47 5.65
PSBK Progressive Bank, Inc. of NY 0.68 2.29 27.20 878 8.35 0.84 1.10 13.18 1.11 13.28
QCSB Queens County Bancorp of NY 1.00 2.05 48.31 1,373 14.96 0.75 1.72 10.84 1.74 10.94
RCSB RCSB Financial, Inc. Of NY(7) 0.60 1.24 22.73 4,032 7.85 0.76 0.96 12.26 0.96 12.17
REDY Reliance Bancorp, Inc. of NY 0.64 2.23 36.36 1,927 8.04 0.75 0.56 6.66 0.85 10.11
</TABLE>
<PAGE> 91
RP FINANCIAL, L.C.
- ------------------------------------------
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Table 4.3
Public Market Pricing
Staten Island Savings Bank and the Comparables
As of July 17, 1997
<TABLE>
<CAPTION>
Market Per Share Data
Capitalization --------------
----------------- Core Book Pricing Ratios(3)
Price/ Market 12-Mth Value/ -----------------------------------------------
Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
------- ------ ------ ------ ----- ------ ----- ------ ------
($) ($Mil) ($) ($) (X) (%) (%) (%) (X)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RSID Roslyn Bancorp, Inc. of NY 22.19 968.42 0.93 14.08 NA 157.60 33.99 158.39 23.86
SFED SFS Bancorp of Schenectady NY 18.25 23.20 1.08 17.26 NA 105.74 13.74 105.74 16.90
ROSE T R Financial Corp. of NY 23.87 420.88 1.54 11.90 13.56 200.59 12.36 200.59 15.50
TPAZ Tappan Zee Fin., Inc. of NY 16.62 25.50 0.48 14.00 NA 118.71 21.27 118.71 NA
ESAK The Elmira SB FSB of Elmira NY 22.50 15.89 0.85 19.87 25.26 113.24 7.14 118.30 26.47
GRIR The Greater New York SB of NY(7) 21.75 297.50 0.74 11.78 25.29 184.63 11.57 184.63 29.39
YFCB Yonkers Fin. Corp. of NY 16.62 52.85 0.92 13.68 24.81 121.49 18.58 121.49 18.07
Comparable Group
- ----------------
ALBK ALBANK Fin. Corp. of Albany NY 38.62 495.07 2.71 25.10 17.80 153.86 14.16 177.40 14.25
DIDE Dime Community Bancorp of NY 19.25 252.68 0.97 14.53 22.13 132.48 20.42 154.37 19.85
FMCO FMS Financial Corp. of NY 28.50 68.06 2.15 14.58 20.21 195.47 12.29 199.58 13.26
FSFG First Home Bancorp of NY 29.12 54.48 2.14 12.36 12.34 162.78 10.72 165.73 9.40
FFIC Flushing Fin. Corp. of NY 20.25 163.78 0.89 16.06 23.55 126.09 20.19 126.09 22.75
HAVB Haven Bancorp of Rondhaven NY 37.25 161.29 3.32 23.13 16.34 161.05 9.34 161.68 11.22
IBSF IBS Financial Corp. of NJ 18.25 200.97 0.60 11.45 NA 159.39 27.16 159.39 NA
JSBF JSB Financial, Inc. of NY 44.00 432.52 2.62 34.52 15.94 127.46 28.25 127.46 16.79
OCFC Ocean Fin. Corp. of NJ 34.75 314.80 1.30 27.30 NA 127.29 22.68 127.29 26.73
PFSB PennFed Fin. Services of NJ 27.25 131.37 2.01 19.55 20.19 139.39 10.49 169.04 13.56
PSBK Progressive Bank, Inc. of NY 29.75 113.79 2.50 19.17 12.00 155.19 12.97 175.21 11.90
PULS Pulse Bancorp of S. River NJ 20.37 62.35 1.75 13.14 17.41 155.02 12.09 155.02 11.64
QCSB Queens County Bancorp of NY 48.75 542.93 2.07 18.47 23.78 NA 39.53 NA 23.55
RELY Reliance Bancorp, Inc. of NY 28.75 253.66 1.76 17.56 24.78 163.72 13.17 233.55 16.34
SFIB Statewide Fin. Corp. of NJ 18.37 87.64 1.22 13.21 26.24 139.06 12.94 139.38 15.06
ROSE I R Financial Corp. of NY 23.87 420.88 1.54 11.90 13.56 200.59 12.36 200.59 15.50
<CAPTION>
Dividends(4)
---------------------------
Amount/ Payout
Share Yield Ratio(5)
------- ----- -------
($) (%) (%)
<S> <C> <C> <C>
RSID Roslyn Bancorp, Inc. of NY 0.90 0.90 21.51
SFED SFS Bancorp of Schenectady NY 0.28 1.53 25.93
ROSE T R Financial Corp. of NY 0.52 2.18 33.77
TPAZ Tappan Zee Fin., Inc. of NY 0.20 1.20 41.67
ESAK The Elmira SB FSB of Elmira NY 0.64 2.84 NA
GRIR The Greater New York SB of NY(7) 0.20 0.92 27.03
YFCB Yonkers Fin. Corp. of NY 0.20 1.20 21.74
Comparable Group
- ----------------
ALBK ALBANK Fin. Corp. of Albany NY 0.60 1.55 22.14
DIDE Dime Community Bancorp of NY 0.18 0.94 18.56
FMCO FMS Financial Corp. of NY 0.20 0.70 9.30
FSFG First Home Bancorp of NY 0.40 1.99 18.69
FFIC Flushing Fin. Corp. of NY 0.24 1.19 26.97
HAVB Haven Bancorp of Rondhaven NY 0.60 1.61 18.07
IBSF IBS Financial Corp. of NJ 0.32 1.75 53.33
JSBF JSB Financial, Inc. of NY 1.40 3.18 53.44
OCFC Ocean Fin. Corp. of NJ 0.80 2.30 61.54
PFSB PennFed Fin. Services of NJ 0.28 1.03 13.93
PSBK Progressive Bank, Inc. of NY 0.68 2.29 27.20
PULS Pulse Bancorp of S. River NJ 0.70 3.44 40.00
QCSB Queens County Bancorp of NY 1.00 2.05 48.31
RELY Reliance Bancorp, Inc. of NY 0.64 2.23 36.36
SFIB Statewide Fin. Corp. of NJ 0.40 2.18 32.79
ROSE I R Financial Corp. of NY 0.52 2.18 33.77
<CAPTION>
Financial Characteristics(6)
------------------------------------------------------------------
Reported Core
Total Equity/ NPAs/ ------------- -------------
Assets Assets Assets RDA RDE ROA ROE
------ ------- ------ ---- ---- ---- ---
($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C>
RSID Roslyn Bancorp, Inc. of NY 2,849 21.57 0.31 0.35 1.63 1.42 6.61
SFED SFS Bancorp of Schenectady NY 169 12.99 0.69 0.46 3.46 0.83 6.22
ROSE T R Financial Corp. of NY 3,404 6.16 0.40 0.98 15.66 0.85 13.70
TPAZ Tappan Zee Fin., Inc. of NY 120 17.92 NA 0.69 4.14 0.64 3.82
ESAK The Elmira SB FSB of Elmira NY 223 6.30 0.83 0.28 4.48 0.27 4.28
GRIR The Greater New York SB of NY(7) 2,571 6.27 7.49 0.46 7.67 0.40 6.60
YFCB Yonkers Fin. Corp. of NY 284 15.30 0.73 0.84 5.28 1.16 7.25
Comparable Group
- ----------------
ALBK ALBANK Fin. Corp. of Albany NY 3,496 9.20 0.92 0.81 8.74 1.01 10.91
DIDE Dime Community Bancorp of NY 1,237 15.41 0.82 0.93 6.19 1.03 6.90
FMCO FMS Financial Corp. of NY 554 6.29 1.07 0.64 9.90 0.97 15.10
FSFG First Home Bancorp of NY 508 6.59 0.79 0.90 13.90 1.19 18.24
FFIC Flushing Fin. Corp. of NY 811 16.01 0.27 0.90 5.16 0.93 5.34
HAVB Haven Bancorp of Rondhaven NY 1,728 5.80 0.78 0.62 10.26 0.91 14.94
IBSF IBS Financial Corp. of NJ 740 17.04 0.15 0.52 2.73 0.88 4.68
JSBF JSB Financial, Inc. of NY 1,531 22.17 1.08 1.78 8.11 1.69 7.69
OCFC Ocean Fin. Corp. of NJ 1,388 17.82 0.64 -0.04 -0.29 0.95 6.33
PFSB PennFed Fin. Services of NJ 1,252 7.53 0.69 0.57 7.10 0.85 10.57
PSBK Progressive Bank, Inc. of NY 876 8.35 0.84 1.10 13.18 1.11 13.28
PULS Pulse Bancorp of S. River NJ 516 7.80 0.75 0.72 8.47 1.08 12.67
QCSB Queens County Bancorp of NY 1,373 14.98 0.75 1.72 10.84 1.74 10.94
RELY Reliance Bancorp, Inc. of NY 1,927 8.04 0.75 0.56 6.66 0.85 10.11
SFIB Statewide Fin. Corp. of NJ 677 9.30 0.49 0.51 5.01 0.89 8.74
ROSE I R Financial Corp. of NY 3,404 6.16 0.40 0.98 15.66 0.85 13.70
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) EPS (core basis) is based on actual trailing twelve month data, adjusted to
omit the impact of non-operating items (including the SAIF assessment) on a
tax affected basis, and is shown on a pro forma basis where xxxx
(3) P/E - Price to Earnings; P/B - Price to Book; P/A - Price to Assets; P/TB -
Price to Tangible Book; and P/CORE - Price to Core Earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated twelve month dividend as a percent of trailing twelve month
estimated core earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios based
on trailing twelve month common earnings and average common equity and total
assets balances.
(7) Excludes from averages and medians those companies the subject of actual or
rumored acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, Inc.
calculations. The information provided in this report has been obtained
from sources we believe are reliable, but we cannot guarantee the
accuracy or completeness of such information.
Copyright(c) 1997 by RP Financial, L.C.
<PAGE> 92
EXHIBITS
<PAGE> 93
RP Financial, LC.
LIST OF EXHIBITS
Exhibit
Number Description
------- -----------
I-1 Map of Office Locations
I-2 Staten Island Savings Bank's Audited Financial Statements
I-3 Key Operating Ratios
I-4 Investment Portfolio Composition
I-5 Yields and Costs
I-6 Allowance for Loan Losses Activity
I-7 Gap Analysis
I-8 Loan Portfolio Composition
I-9 Loan Originations, Purchases, and Sales
I-10 Loan Maturity Schedule
I-11 Non-Performing Assets
I-12 Historical Deposit Composition
I-13 Time Deposit Rate/Maturity
II-1 List of Branch Offices
II-2 Historical Interest Rates
II-3 A. Demographic Reports for Nation, State, MSA, County and
Zip Codes
B. Personal Income by Major Source and Earnings by Industry
C. Full-Time and Part-Time Employees by Major Industry
D. Regional Economic Profile
<PAGE> 94
RP Financial, LC.
LIST OF EXHIBITS
(CONTINUED)
Exhibit
Number Description
------- -----------
III-1 General Characteristics of Publicly-Traded Institutions
III-2 Financial Analysis of New York Institutions
III-3 Financial Analysis of New Jersey Thrifts
III-4 Peer Group Market Area Comparative Analysis
IV-1 Stock Prices: July 17, 1997
IV-2 Historical Stock Price Indices
IV-3 Historical Thrift Stock Indices
IV-4 Market Area Acquisition Activity
IV-5 Directors and Senior Management Summary Resumes
IV-6 Pro Forma Analysis Sheet
IV-7 Pro Forma Effect of Conversion Proceeds
IV-9 Peer Group Core Earnings Analysis
IV-9 Pro Forma Regulatory Capital Ratios
V-1 Firm Qualifications Statement
<PAGE> 95
EXHIBIT I-1
Staten Island Savings Bank
Map of Office Locations
<PAGE> 96
EXHIBIT I-1
Staten Island Savings Bank
Map of Office Locations
[STATEN ISLAND SAVINGS BANK
BRANCH LOCATIONS MAP]
<PAGE> 97
EXHIBIT I-2
Staten Island Savings Bank
Audited Financial Statements
[Incorporated by Reference]
<PAGE> 98
EXHIBIT I-3
Staten Island Savings Bank
Key Operating Ratios
<PAGE> 99
EXHIBIT I-3
STATEN ISLAND SAVINGS BANK
KEY OPERATING RATIOS
KEY OPERATING RATIOS:
<TABLE>
<CAPTION>
At or For the Four
Months
Ended April 30, At or For the Year Ended December 31,
------------------ ---------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
PERFORMANCE RATIOS:(2)
Return on average assets................... 1.15% 1.21% 1.24% 0.88% 1.17% 1.21% 1.00%
Return on average equity................... 12.11 13.86 14.03 9.54 13.27 15.17 14.00
Average interest-earning assets to average
interest-bearing liabilities............. 118.89 118.97 120.24 117.17 113.05 110.61 108.55
Interest rate spread(3).................... 4.02 3.62 3.84 3.63 3.64 3.91 3.48
Net interest margin(3)..................... 4.58 4.21 4.46 4.16 4.00 4.22 3.82
Noninterest expenses, exclusive of
amortization of intangible assets, to
assets................................... 2.35 2.19 2.16 2.11 1.81 1.82 1.81
ASSET QUALITY RATIOS:
Nonperforming assets to total assets
at end of period(4)...................... 1.39% 1.60% 1.34% 1.44% 0.61% 0.62% 0.48%
Allowance for loans losses to
nonperforming loans at end of period..... 60.16 40.84 43.85 44.20 38.79 41.21 48.86
Allowance for loan losses to total loans
at end of period......................... 1.48 1.34 1.02 1.32 0.51 0.62 0.50
CAPITAL AND OTHER RATIOS:
Average equity to average assets........... 9.52% 8.78% 8.85% 9.21% 8.84% 8.00% 7.11%
Tangible equity to assets at end of
period................................... 8.33 7.50 8.22 7.09 9.55 8.40 7.34
Total capital to risk-weighted assets...... 21.11 19.58 20.66 19.65 17.16 16.30 13.78
</TABLE>
- -----------------------
(1) Consists of excess of cost over fair value of net assets acquired
("goodwill") and core deposit intangibles which amounted to $14.7 million
and $5.1 million at April 30, 1997, respectively.
(2) With the exception of end of period ratios, all ratios are based on average
daily balances during the respective periods and are annualized where
appropriate.
(3) Interest rate spread represents the difference between the weighted average
yield on interest-earning assets and the weighted average cost of
interest-bearing liabilities; net interest margin represents net interest
income as a percentage of average interest-earning assets.
(4) Nonperforming assets consist of non-accrual loans, accruing loans more than
90 days past due and real estate acquired through foreclosure or by
deed-in-lien thereof.
<PAGE> 100
EXHIBIT I-4
Staten Island Savings Bank
Investment Portfolio Composition
<PAGE> 101
Exhibit I-4
Staten Island Savings Bank
Investment Portfolio Composition
<TABLE>
<CAPTION>
Four Months Ended
April 30, Year Ended December 31,
--------------------- -------------------------------------
1997 1996 1996 1995 1994
---- ---- ---- ---- ----
(In Thousands)
<S> <C> <C> <C> <C> <C>
Securities at beginning of period.... $703,134 $788,622 $788,622 $699,470 $773,636
Purchases:
U.S. government and agencies....... 15,073 -- 29,670 215,948 998
State and municipals............... -- -- -- 11,591 --
Agency mortgage-backed securities.. 15,452 60,476 212,634 136,610 98,983
Agency CMOs........................ 17,976 9,975 35,079 19,944 --
Private CMOs....................... -- 29,843 53,258 116 --
Other debt securities.............. -- -- -- 330 70,608
Marketable equity securities....... 4,780 8,389 15,059 4,614 24,471
-------- ------- -------- -------- --------
Total purchases................... 53,281 108,683 345,700 389,173 195,060
Sales:
U.S. government and agencies....... 9,956 9,500 71,051 5,000 6,084
State and municipals............... 3,045 -- 70 12,132 113
Agency mortgage-backed securities.. -- 8,115 113,617 -- --
Agency CMOs........................ -- -- 16,332 -- --
Private CMOs....................... -- -- -- -- --
Other debt securities.............. -- 1,359 36,042 99,122 2,530
Marketable equity securities....... 6,364 3,275 3,305 5,272 18,462
-------- -------- -------- -------- ---------
Total sales....................... 19,365 22,249 240,417 121,526 27,189
Repayments and prepayments:
U.S. government and agencies....... 6,750 17,300 46,800 53,610 37,300
State and municipals............... -- -- -- 100 --
Agency mortgage-backed securities.. 31,411 34,724 102,748 54,430 68,208
Agency CMOs........................ 1,712 1,028 4,399 3 --
Private CMOs....................... 3,667 926 3,466 24 --
Other debt securities.............. -- 26,340 31,767 86,470 112,325
Marketable equity securities....... -- -- -- -- --
-------- -------- -------- -------- --------
Total repayments and prepayments.. 43,540 80,318 189,180 194,637 217,833
Accretion of discount and
amortization of premium........... (93) (403) (692) (4,421) (7,306)
Unrealized gains or (losses) on
available-for-sale securities...... (1,294) (10,779) (899) 20,563 (16,898)
Realized gains and losses an
trading assets..................... (231) -- -- -- --
-------- -------- -------- -------- --------
Securities at end of period.......... $691,892 $783,556 $703,134 $788,622 $699,470
======== ======== ======== ======== ========
</TABLE>
<PAGE> 102
EXHIBIT I-5
Staten Island Savings Bank
Yields and Costs
<PAGE> 103
Exhibit I-5
Staten Island Savings Bank
Yields and Costs
<TABLE>
<CAPTION>
Yield/Cost Four Months Ended
at April 30, 1997 April 30,
-------------------------------------------------------------------------------------------------
1997 1996
-------------------------------------- ---------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
---------- -------- ------- ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Loans receivable(1):
Real estate loans..................... 8.40 $ 936,397 $25,259 8.20% $ 744,295 $20,966 8.24%
Other loans........................... 11.74 63,906 1,710 8.14 57,136 1,655 8.81
---------- ------- ---------- -------
Total loans ........................ 8.52 1,000,303 26,969 8.20 831,431 22,621 8.28
Securities ............................. 6.70 689,125 15,277 6.74 760,429 16,051 6.42
Other earning assets (2) ............... 5.47 38,264 679 5.40 29,768 534 5.46
---------- ------- ---------- -------
Total interest-earning assets ........ 7.69 1,727,692 42,925 7.56 1,621,628 39,206 7.36
------- -------
Noninterest-earning assets ............... 90,029 94,104
---------- ----------
Total assets ......................... $1,817,721 $1,715,732
========== ==========
Interest-bearing liabilities:
Deposits:
NOW and money market deposits ........ 2.84 $ 99,502 912 2.79 $ 136,660 1,172 2.61
Savings deposits ..................... 2.64 825,097 7,142 2.63 745,170 6,997 2.86
Certificates of deposit .............. 5.11 515,547 8,588 5.07 481,176 8,572 5.42
---------- ------- ---------- -------
Total deposits ..................... 3.54 1,440,146 16,642 3.51 1,363,006 16,741 3.74
Total other borrowings ................. 6.10 13,044 261 6.09 45 2 13.52
---------- ------- ---------- -------
Total interest-bearing liabilities ..... 3.59 1,453,190 16,903 3.54 1,363,051 16,743 3.74
------- -------
Noninterest-bearing liabilities (3) ...... 191,486 201,995
---------- ----------
Total liabilities .................. 1,644,676 1,565,046
Stockholders' equity ..................... 173,045 150,686
---------- ----------
Total liabilities and equity ....... $1,817,721 $1,715,732
========== ==========
Net interest-earning assets .............. $ 274,502 $ 258,577
========== ==========
Net interest income/interest rate spread . $26,022 4.02% $22,463 3.62%
======= ====== ======= ======
Net interest margin ...................... 4.58% 4.21%
====== ======
Ratio of average interest-earning assets
to average interest-bearing liabilities 118.89% 118.97%
====== ======
</TABLE>
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------
1996 1995
--------------------------------------------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
---------- -------- ------- ---------- -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets:
Loans receivable(1):
Real estate loans......................... $ 833,770 $68,600 8.23% $ 645,250 $ 53,265 8.25%
Other loans............................... 57,913 5,144 8.88 54,719 4,871 8.90
---------- ------- ---------- --------
Total loans ............................ 891,683 73,744 8.27 699,969 58,136 8.31
Securities ................................. 737,796 49,083 6.65 700,048 43,593 6.23
Other earning assets (2) ................... 29,853 1,603 5.37 45,646 2,627 5.76
---------- ------- ---------- -------
Total interest-earning assets ............ 1,659,332 124,430 7.50 1,445,663 104,356 7.22
------- -------
Noninterest-earning assets ................... 93,611 60,104
---------- ----------
Total assets ............................. $1,752,943 $1,505,767
========== ==========
Interest-bearing liabilities:
Deposits:
NOW and money market deposits ............ $ 134,600 3,479 2.58 $ 100,824 2,573 2.55
Savings deposits ......................... 752,190 21,192 2.82 741,147 20,915 2.82
Certificates of deposit .................. 493,180 25,760 5.22 391,786 20,741 5.29
---------- ------- ---------- -------
Total deposits ......................... 1,379,970 50,431 3.65 1,233,757 44,229 3.58
Total other borrowings ..................... 47 6 12.77 46 5 10.87
---------- ------- ---------- -------
Total interest-bearing liabilities ......... 1,380,017 50,437 3.65 1,233,803 44,234 3.59
------- -------
Noninterest-bearing liabilities (3) .......... 217,740 133,275
---------- ----------
Total liabilities ...................... 1,597,757 1,367,078
Stockholders' equity ......................... 155,186 138,689
---------- ----------
Total liabilities and equity ........... $1,752,943 $1,505,767
========== ==========
Net interest-earning assets .................. $ 279,315 $ 211,860
========== ==========
Net interest income/interest rate spread ..... $73,993 3.84% $60,122 3.63%
======= ====== ======= ======
Net interest margin .......................... 4.46% 4.16%
====== ======
Ratio of average interest-earning assets
to average interest-bearing liabilities .... 120.24% 117.17%
====== ======
</TABLE>
<TABLE>
<CAPTION>
Year Ended Ended December 31,
-------------------------------------
1994
-------------------------------------
Average
Average Yield/
Balance Interest Cost
---------- -------- -------
<S> <C> <C> <C>
Interest earning assets:
Loans receivable(1):
Real estate loans......................... $ 528,311 $41,727 7.90%
Other loans............................... 38,213 3,273 8.57
---------- -------
Total loans ............................ 566,544 45,000 7.94
Securities ................................. 758,320 44,496 5.87
Other earning assets (2) ................... 19,230 788 4.10
---------- -------
Total interest-earning assets ............ 1,344,094 90,284 6.72
-------
Noninterest-earning assets ................... 37,620
----------
Total assets ............................. $1,381,714
==========
Interest-bearing liabilities:
Deposits:
NOW and money market deposits ............ $ 86,183 2,037 2.36
Savings deposits ......................... 844,334 23,900 2.83
Certificates of deposit .................. 258,337 10,595 4.10
---------- -------
Total deposits ......................... 1,188,854 36,532 3.07
-------
Total other borrowings ..................... 54 5 9.26
---------- -------
Total interest-bearing liabilities ......... 1,188,908 36,537 3.07
-------
Noninterest-bearing liabilities (3) .......... 70,718
----------
Total liabilities ...................... 1,259,626
Stockholders' equity ......................... 122,088
----------
Total liabilities and equity ........... $1,381,714
==========
Net interest-earning assets .................. $ 155,186
==========
Net interest income/interest rate spread ..... $53,747 3.64%
======= ======
Net interest margin .......................... 4.00%
======
Ratio of average interest-earning assets
to average interest-bearing liabilities .... 113.05%
======
</TABLE>
- ------------------
(1) The average balance of loans receivable includes nonperforming loans,
interest on which is recognized on a cash basis
(2) Includes money market accounts, Federal Funds sold and interest earning
bank deposits
(3) Consists primarily of demand deposit accounts
<PAGE> 104
EXHIBIT I-6
Staten Island Savings Bank
Allowance for Loan Losses Activity
<PAGE> 105
EXHIBIT I-6
Staten Island Savings Bank
Allowance for Loan Losses Activity
<TABLE>
<CAPTION>
Four Months Ended
April 30, Year Ended December 31,
------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
-------- -------- -------- -------- ------- ------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Allowance at beginning of period .. $ 9,977 $10,704 $10,704 $ 3,124 $3,180 $2,303 $ 950
------- ------- ------- ------- ------ ------ ------
Allowance from acquisition ........ -- -- -- 8,026 -- -- --
Provisions ........................ 4,667 -- 1,000 -- 76 1,286 2,243
Charge-offs:
Mortgage loans:
Single-family residential ... 175 30 1,590 606 107 463 443
Multi-family residential .... -- -- -- -- 36 67 --
Commercial real estate ...... 116 10 376 -- -- -- --
Other loans ................... 114 30 729 176 275 386 698
------- ------- ------- ------- ------ ------ ------
Total charge-offs ........... 405 70 2,695 782 418 916 1,141
Recoveries:
Mortgage loans:
Single-family residential ... 164 156 408 198 166 335 79
Multi-family residential .... -- -- -- -- 10 43 --
Commercial real estate ...... 194 360 413 19 -- -- --
Other loans ................... 90 31 147 119 110 129 172
------- ------- ------- ------- ------ ------ ------
Total recoveries ............ 448 547 968 336 286 507 251
------- ------- ------- ------- ------ ------ ------
Allowance at end of period ........ $14,687 $11,181 $ 9,977 $10,704 $3,124 $3,180 $2,303
======= ======= ======= ======= ====== ====== ======
Allowance for possible loan losses
to total nonperforming loans at
end of period ................... 60.16% 40.84% 43.85% 44.20% 38.79% 41.21% 48.86%
======= ======= ======= ======= ====== ====== ======
Allowance for possible loan losses
to total loans at end of
period .......................... 1.48% 1.34% 1.02% 1.32% 0.51% 0.62% 0.50%
======= ======= ======= ======= ====== ====== ======
</TABLE>
<PAGE> 106
EXHIBIT I-7
Staten Island Savings Bank
Gap Analysis
<PAGE> 107
STATEN ISLAND SAVINGS BANK
GAP ANALYSIS
<TABLE>
<CAPTION>
MORE THAN
THREE TO MORE THAN THREE YEARS
WITHIN THREE TWELVE ONE YEAR TO TO FIVE OVER FIVE
MONTHS MONTHS THREE YEARS YEARS YEARS TOTAL
------------ -------- ----------- ----------- --------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets(1):
Loans receivable(2):
Mortgage loans:
Fixed ................................. $ 9,458 $ 29,741 $ 75,853 $ 80,319 $313,852 $ 509,223
Adjustable ............................ 51,472 93,684 110,015 118,521 51,748 425,440
Other loans 18,437 5,553 7,601 4,389 353 36,333
Securities:
Non-mortgage(3) ......................... 7,982 27,405 42,359 22,664 40,870 141,280
Mortgaged-backed fixed(4) ............... 14,883 29,780 68,653 65,866 81,672 260,854
Mortgage-backed adjustable(4) ........... 22,830 100,685 55,163 51,649 230,327
Other interest-earning assets ............. 74,150 -- -- -- -- 74,150
-------- --------- --------- -------- -------- ----------
Total interest-earning assets ......... $199,212 $ 286,848 $ 359,644 $343,408 $488,495 $1,677,607
======== ========= ========= ======== ======== ==========
Interest-bearing liabilities:
Deposits:
NOW accounts(5) ......................... $ 1,545 $ 4,636 $ 5,681 $ 1,504 $ 3,342 $ 16,708
Savings accounts(5) ..................... 34,953 104,860 213,832 139,813 328,973 822,431
Money market deposit accounts(5) ........ 16,180 48,540 9,012 4,301 3,891 81,924
Certificates of deposit ................. 137,565 250,049 120,480 19,494 -- 527,588
Other borrowings .......................... -- 15,000 15,000 -- 43 30,043
-------- --------- --------- -------- -------- ----------
Total interest-bearing liabilities .... $190,243 $ 423,085 $ 364,005 $165,112 $336,249 $1,478,694
======== ========= ========= ======== ======== ==========
Excess (deficiency) of interest-earning
assets over interest-bearing liabilities .. $ 8,969 $(136,237) $ (4,361) $178,296 $152,246 $ 198,913
======== ========= ========= ======== ======== ==========
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities ....................... $ 8,969 $(127,268) $(131,629) $ 46,636 $198,913
======== ========= ========= ======== ========
Cumulative excess (deficiency) of
interest-earning assets over interest-
bearing liabilities as a percent of
total assets .............................. 0.49% (6.89)% (7.12)% 2.52% 10.76%
==== ===== ===== ==== =====
</TABLE>
- ---------------------------------
(1) Adjustable-rate loans are included in the period in which interest rates
are next scheduled to adjust rather than in the period in which they are
due, and fixed-rate loans are included in the periods in which they are
scheduled to be repaid, based on scheduled amortization, as adjusted to
take into account estimated prepayments based on assumptions used by the
OTS in assessing the interest rate sensitivity of savings associations in
the Bank's region.
(2) Balances have been reduced for non-performing loans, which amounted to
$24.4 million at April 30, 1997.
(3) Based on contractual maturities.
(4) Reflects estimated prepayments in the current interest rate environment.
(5) Although the Bank's NOW accounts, passbook savings accounts and money
market deposit accounts are subject to immediate withdrawal, management
considers a substantial amount of such accounts to be core deposits having
significantly longer effective maturities. The decay rates used on these
account are based on the latest available OTS assumptions and should not be
regarded as indicative of the actual withdrawals that may be experienced by
the Bank. If all of the Bank's NOW accounts, passbook savings accounts and
money market deposit accounts had been assumed to be subject to repricing
within one year, interest-bearing liabilities which were estimated to
mature or reprice within one year would have exceeded interest-earning
assets with comparable characteristics by $837.6 million or 45.3% of total
assets.
<PAGE> 108
EXHIBIT I-8
Staten Island Savings Bank
Loan Portfolio Composition
<PAGE> 109
Exhibit I-8
Staten Island Savings Bank
Loan Portfolio Composition
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------------------
April 30,
1997 1996 1995 1994
----------------------- ----------------------- ----------------------- ----------------------
Percent of Percent of Percent of Percent of
Amount Total Amount Total Amount Total Amount Total
--------- ---------- --------- ---------- -------- ---------- -------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Single-family residential:
Conventional ............ $ 743,143 76.10% $ 707,481 73.09% $578,626 72.23% $478,848 78.63%
FHA/VA .................. 12,354 1.27 13,392 1.38 16,285 2.03 19,165 3.15
Multi-family residential .. 28,983 2.97 26,444 2.73 25,977 3.24 24,347 4.00
Commercial real estate .... 112,270 11.50 115,593 11.94 99,000 12.36 30,037 4.93
Construction and land ..... 31,417 3.22 28,779 2.97 18,123 2.26 3,003 0.49
Home equity ............... 29,935 3.07 29,680 3.07 25,246 3.15 18,042 2.96
--------- ------ --------- ----- -------- ----- -------- ------
Total mortgage loans .... 958,102 98.12 921,369 95.18 763,257 95.27 573,442 94.17
Other loans:
Student loans ............. 4,999 0.51 4,522 0.47 6,072 0.76 23,398 3.84
Automobile leases(1)....... -- -- 28,249 2.92 18,705 2.33 8,344 1.37
Passbook loans ............ 6,382 0.65 5,933 0.61 5,683 0.71 4,673 0.77
Discounted loans .......... 7,118 0.73 6,731 0.70 5,528 0.69 -- 0.00
Commercial business loans . 8,266 0.85 8,264 0.85 9,729 1.21 200 0.03
Other ..................... 10,537 1.08 9,712 1.00 9,079 1.13 5,972 0.98
--------- ------ -------- ------ --------- ----- -------- -------
Total other loans ....... 37,302 3.82 63,411 6.55 54,796 6.84 42,587 6.99
--------- ------ -------- ------ --------- ----- -------- -------
Total loans receivable .. 995,404 101.94% 984,780 101.73% 818,053 102.11% 616,029 101.16%
Less:
Discount on loans purchased (803) (0.08) (3,475) (0.36)% (2,911) (0.36)% (1,134) (0.19)%
Allowance for loan losses . (14,687) (1.50) (9,977) (1.03) (10,704) (1.34) (3,124) (0.51)
Deferred loan fees ........ (3,413) (0.35) (3,313) (0.34) (3,301) (0.41) (2,817) (0.46)
--------- ------ -------- ------- -------- ------- -------- ------
Loans receivable,net ........ $ 976,501 100.00% $968,015 100.00% $801,137 100.00% $608,954 100.00%
========= ====== ======== ====== ======== ======= ======== ======
<CAPTION>
December 31,
-------------------------------------------------------
1993 1992
----------------------- -----------------------
Percent of Percent of
Amount Total Amount Total
-------- ---------- -------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Mortgage loans:
Single-family residential:
Conventional ............ $394,892 76.86% $330,470 72.63%
FHA/VA .................. 24,027 4.68 30,588 6.72
Multi-family residential .. 24,190 4.71 19,367 4.26
Commercial real estate .... 26,002 5.06 25,534 5.61
Construction and land ..... 2,626 0.51 2,150 0.47
Home equity ............... 12,548 2.44 12,616 2.77
-------- ------ -------- ------
Total mortgage loans .... 484,285 94.25 420,225 92.46
Other loans:
Student loans ............. 22,607 4.40 22,691 4.99
Automobile leases ......... -- -- -- --
Passbook loans ............ 3,927 0.76 4,464 0.98
Discounted loans .......... -- -- -- --
Commercial business loans . -- -- -- --
Other ..................... 8,601 1.67 11,545 2.54
-------- ------ -------- ------
Total other loans ....... 35,135 6.84 38,700 8.51
-------- ------ -------- ------
Total loans receivable .. 519,420 101.09% 459,425 100.98%
Less:
Discount on loans purchased (15) --% (6) --%
Allowance for loan losses . (3,180) (0.62) (2,303) (0.51)
Deferred loan fees ........ (2,422) (0.47) (2,134) (0.47)
-------- ------ -------- ------
Loans receivable,net ........ $513,803) 100.00% $454,982 100.00%
======== ====== ======== ======
</TABLE>
(1) Consists of loans secured by assignments of automobile lease payments.
<PAGE> 110
EXHIBIT I-9
Staten Island Savings Bank
Loan Originations, Purchases, and Sales
<PAGE> 111
EXHIBIT I-9
Staten Island Savings Bank
Loan Originations, Purchases, and Sales
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
Four Months Ended
April 30, 1997 1996 1995 1994
----------------- -------- -------- --------
(In Thousands)
<S> <C> <C> <C> <C>
Total Loans held at beginning
of period ...................... $984,780 $818,053 $616,029 $519,420
Originations of loans:
Mortgage loans:
Single-family residential .... 56,590 181,200 105,359 120,190
Multi-family residential ..... 3,155 2,087 3,587 5,832
Commercial real estate ....... 4,882 35,677 13,557 6,083
Construction and land ........ 11,250 32,080 15,425 1,654
Home equity .................. 853 1,224 887 1,113
Other loans:
Student loans................. 1,620 3,469 3,449 10,517
Automobile leases ............ 3,697 14,078 13,000 8,829
Passbook loans ............... 2,471 5,995 5,926 5,303
Discounted loans ............. 387 1,203 5,528 --
Commercial business loans .... 3,041 7,806 2,766 200
Other consumer loans(1) ...... 1,944 3,131 1,236 5,281
-------- -------- -------- --------
Total originations ......... 89,890 287,950 170,720 165,002
Purchases of loans:
Mortage loans:
Single-family residential .... -- -- 39,172 699
Multi-family residential ..... -- -- 319 --
Commercial real estate ....... -- -- 60,495 --
Construction and land ........ -- -- 15,925 --
Home equity .................. -- -- -- --
Other loans:
Student loans ................ -- -- -- --
Automobile leases ............ -- -- -- --
Passbook loans ............... -- -- -- --
Discounted loans ............. -- -- 7,456 --
Commercial business loans .... -- -- 8,947 --
Other consumer loans ......... -- -- 2,517 --
-------- -------- -------- --------
Total purchases ............ -- -- 134,831(2) 699
-------- -------- -------- --------
Total originations and
purchases ..............
Loans sold:
Mortgage loans:
Single-family residential .... 410 -- -- --
Multi-family residential ..... -- -- -- --
Commercial real estate ....... -- -- -- --
Construction and land ........ -- -- -- --
Home equity .................. -- -- -- --
Other loans:
Student loans ................ 838 3,340 21,858 --
Automobile leases ............ -- -- -- --
Passbook loans ............... -- -- -- --
Discounted loans ............. -- -- -- --
Commercial business loans .... -- -- -- --
Other consumer loans ......... -- -- -- --
-------- -------- -------- --------
Total sold ................. 1,248 3,340 21,858 --
Transfers to real estate owned.... 725 1,629 1,147 373
Charge-offs....................... 293 2,373 615 277
Repayments ....................... 7,700 113,881 79,907 68,442
-------- -------- -------- --------
New activity in loans ............ 10,624 166,727 202,024 96,609
-------- -------- -------- --------
Gross loans held at end
of period ...................... $995,404 $984,780 $818,053 $616,029
======== ======== ======== ========
</TABLE>
- --------------
(1) Includes amounts drawn on overdraft accounts.
(2) Includes $124.2 million of loans acquired from Gateway.
<PAGE> 112
EXHIBIT I-10
Staten Island Savings Bank
Loan Maturity Schedule
<PAGE> 113
EXHIBIT I-10
Staten Island Savings Bank
Loan Maturity Schedule
<TABLE>
<CAPTION>
Principal Repayments Contractually Due
in Year(s) Ended April 30,
---------------------------------------------------------------------------------
Total at
April 30, 2001- 2003- 2009- There-
1997 1998 1999 2000 2002 2008 2014 after
-------- ------- ------- ------- ------- ------- -------- --------
(In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Single-family residential $755,497 $16,047 $16,372 $17,689 $39,765 $46,427 $ 81,298 $537,899
Multi-family residential 28,993 1,033 1,131 1,238 2,838 3,400 6,407 12,936
Commercial real estate .. 112,270 5,303 5,847 6,447 14,944 18,086 31,449 30,194
Construction and land ... 31,417 28,324 -- -- -- -- -- 3,093
Home equity ............. 29,935 1,828 1,964 2,081 4,299 4,432 5,038 10,293
0ther loans ............... 37,302 19,892 5,275 3,765 3,013 230 114 5,013
-------- ------- ------- ------- ------- ------- -------- --------
Total(1) .............. $995,404 $72,427 $30,589 $31,220 $64,859 $72,575 $124,306 $599,428
======== ======= ======= ======= ======= ======= ======== ========
</TABLE>
- ---------------
(1) Of the $923.2 million of loan principal repayments contractually due
after April 30, 1998, $519.7 million have fixed rates of interest and
$403.3 million have adjustable rates of interest.
<PAGE> 114
EXHIBIT I-11
Staten Island Savings Bank
Non-Performing Assets
<PAGE> 115
Exhibit I-11
Staten Island Savings Bank
Non-Performing Assets
<TABLE>
<CAPTION>
At December 31,
At April 30, -------------------------------------------------
1997 1996 1995 1994 1993 1992
-------- ------- ------- ------ ------ ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Accruing loans 90 days or more past due:
Mortgage loans........................... $ -- $ -- $ -- $ -- $ -- $ --
Other loans.............................. -- 1 302 415 262 544
-------- ------- ------- ------ ------ ------
Total accruing loans............. -- 1 302 415 262 544
-------- ------- ------- ------ ------ ------
Non-accrual loans:
Mortgage loans:
Single-family residential............ 9,984 10,417 11,159 6,692 7,240 3,848
Multi-family residential............. 1,461 322 98 86 58 --
Commercial real estate............... 8,876 11,102 11,653 560 -- --
Construction and land................ 2,714 -- 379 240 -- --
Home equity.......................... 556 644 124 -- -- 132
Other loans:
Automobile leases.................... -- 15 18 -- -- --
Commercial business loans............ 300 81 49 -- -- --
Discounted loans..................... 247 25 126 -- -- --
Other loans.......................... 277 144 307 61 157 191
-------- ------- ------- ------ ------ ------
Total non-accruing loans......... 24,415 22,750 23,913 7,639 7,455 4,169
-------- ------- ------- ------ ------ ------
Total non-performing loans................... 24,415 22,751 24,215 8,054 7,717 4,713
-------- ------- ------- ------ ------ ------
Other real estate owned, net................. 1,317 1,103 627 373 766 1,755
-------- ------- ------- ------ ------ ------
Total non-performing assets.................. 25,732 23,854 24,842 8,427 8,483 6,468
-------- ------- ------- ------ ------ ------
Total non-performing assets.................. $ 25,732 $23,854 $24,842 $8,427 $8,483 $8,330
======== ======= ======= ====== ====== ======
Non-performing assets to total loans......... 2.59% 2.42% 3.04% 1.37% 1.63% 1.41%
Non-performing assets to total assets........ 1.39% 1.34% 1.44% 0.61% 0.62% 0.48%
Non-performing loans to total loans.......... 2.45% 2.31% 2.96% 1.31% 1.49% 1.03%
Non-performing loans to total assets......... 1.32% 1.28% 1.40% 0.59% 0.57% 0.35%
</TABLE>
<PAGE> 116
EXHIBIT I-12
Staten Island Savings Bank
Historical Deposit Composition
<PAGE> 117
Exhibit I-12
Staten Island Savings Bank
Historical Deposit Composition
<TABLE>
<CAPTION>
April 30, December 31,
----------------------- ---------------------------------------------------------------------------
1997 1996 1995 1994
----------------------- ----------------------- ----------------------- -----------------------
Amount Percentage Amount Percentage Amount Percentage Amount Percentage
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Savings accounts .......... $ 822,431 51.2% $ 832,584 52.77% $ 739,697 48.17% $ 793,753 64.74%
Certificates of deposit ... 527,588 32.8 500,570 31.73 467,362 30.43 286,210 23.35
Money market accounts ..... 81,924 5.1 79,704 5.05 83,343 5.43 58,086 4.74
NOW Accounts .............. 16,708 1.0 14,298 0.91 55,124 3.59 24,878 2.03
Demand deposits ........... 158,142 9.8 150,592 9.54 190,091 12.38 62,991 5.14
---------- ----- ---------- ------ ---------- ------ ---------- ------
Total ................... $1,606,793 100.0% $1,577,748 100.00% $1,535,617 100.00% $1,225,918 100.00%
========== ===== ========== ====== ========== ====== ========== ======
</TABLE>
<PAGE> 118
EXHIBIT I-13
Staten Island Savings Bank
Time Deposit Rate/Maturity
<PAGE> 119
Exhibit I-13
Staten Island Savings Bank
Time Deposit Rate/Maturity
<TABLE>
<CAPTION>
December 31,
April 30, -------------------------------
1997 1996 1995 1994
------ ------ ------ ------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
0.00% to 2.99%... $ -- $ -- $ -- $ 13,573
3.00% to 3.99%... 11,082 12,314 20,138 90,046
4.00% to 4.99%... 177,868 223,234 103,882 83,239
5.00% to 6.99%... 336,505 262,924 334,922 93,136
7.00% to 8.99%... 2,133 2,098 8,420 6,216
9.00% to 10.99%.. -- -- -- --
11.00% and over.. -- -- -- --
-------- -------- -------- --------
Total ........ $527,588 $500,570 $467,362 $286,210
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Over Six Over One Over Two
Months Year Years
Six Months Through One Through Through Over Three
and Less Year Two Years Three Years Years
----------- ----------- ---------- ----------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
0.00% to 1.99%........ $ -- $ -- $ -- $ -- $ --
2.00% to 2.99%........ -- -- -- -- --
3.00% to 3.99%........ 9,995 1,087 -- -- --
4.00% to 4.99%........ 138,768 5,549 32,669 882 --
5.00% to 6.99%........ 122,670 109,545 67,877 17,054 19,359
7.00% to 8.99%........ -- -- -- 1,998 135
9.00% to 10.99%....... -- -- -- -- --
11.00% & over......... -- -- -- -- --
-------- -------- -------- -------- -------
Total.............. $271,433 $116,181 $100,546 $19,934 $19,494
======== ======== ======== ======= =======
</TABLE>
<PAGE> 120
EXHIBIT II-1
STATEN ISLAND SAVINGS BANK
LIST OF BRANCH OFFICES
<PAGE> 121
EXHIBIT II-1
STATEN ISLAND SAVINGS BANK
LIST OF BRANCH OFFICES
<TABLE>
<CAPTION>
Net Book Value of
Properly and
Lease Leasehold
Owned or Expiration Improvements at Deposits at
Location(1) Leased Date April 30, 1997 April 30, 1997
- ----------------------------------------- --------- ----------- ------------------ ----------------
(In Thousands)
<S> <C> <C> <C> <C>
EXECUTIVE OFFICE:
15 Beach Street Owned $1,659 $ --
Staten Island, NY 10304
BRANCH OFFICES:
81-91 Water Street Owned 215 127,087
Staten Island, NY 10304
15 Hyatt Street Owned 43 63,403
Staten Island, NY 10301
257 New Dorp Lane Owned 26 135,242
Staten Island, NY 10305
260 New Dorp Lane Owned 516 --(1)
Staten Island, NY 10305
Accommodations Office
1837 Victory Boulevard Owned 231 155,957
Staten Island, NY 10314
1850 Victory Boulevard Owned 171 --(2)
Staten Island, NY 10314
Accommodation Office
1320 Hylan Boulevard Owned 594 156,409
Staten Island, NY 10305
461-465, 475 Forest Avenue Owned 1,209 109,701
Staten Island, NY 10310
3150 Amboy Road Owned $ 446 $ 99,273
Staten Island, NY 10308
900 Huguenot Avenue Leased 2000(3) 385 66,743
Staten Island, NY 10312
5840 Amboy Road Owned 924 --(4)
Staten Island, NY 10309
2700 Hylan Boulevard Leased 2005(3) 425 118,522
Staten Island, NY 10306
4025 Amboy Road Owned 323 100,121
Staten Island, NY 10308
6975 Amboy Road Owned 1,446 58,889
Staten Island, NY 10309
</TABLE>
<PAGE> 122
EXHIBIT II-1 (CONTINUED)
STATEN ISLAND SAVINGS BANK
LIST OF BRANCH OFFICES
<TABLE>
<S> <C> <C> <C> <C>
1630 Forest Avenue Owned 770 76,479
Staten Island, NY 10302
43 Richmond Hill Road Leased 1999(3) 543 64,056
Staten Island, NY 10314
800 Forest Avenue Owned 826 53,848
Staten Island, NY 10310
1630 Richmond Road Owned 1,091 137,240
Staten Island, NY 10304
4310-4312-4320 Amboy Road Leased 1998(3) 110 47,630
Staten Island, NY 10312
9512-20 3rd Avenue Leased 1999(3) 331 43,133
Brooklyn, NY 11209
OTHER OFFICES:
45 Beach Street Owned 455 --(5)
Staten Island, NY 10304
260 Christopher Lane Leased 2003 252 --(6)
Staten Island, NY 10314
96 Prospect Street Owned 330 --(5)
Staten Island, NY 10304
1591 Richmond Road Owned $ 651 $ --(7)
Staten Island, NY 10304
176 Broadway Leased 2000 -- --(8)
New York, NY 10038
</TABLE>
- --------------------
(1) Consists of two ATMs and a manned drive-in facility.
(2) A limited service office which does not accept or maintain deposits but
which offers all other products and services.
(3) Excludes options to extended term.
(4) An automated drive through facility with two ATMs.
(5) Administrative office.
(6) Loan origination center.
(7) Trust Department office.
(8) SBLI Department.
<PAGE> 123
EXHIBIT 11-2
Historical Interest Rates
<PAGE> 124
HISTORICAL INTEREST RATES(l)
<TABLE>
<CAPTION>
Prime 90 Day One Year 30 Year
Year/Qtr. Ended Rate T-Bill T-Bill T-Bond
- ------------------ ----- ------ -------- -------
<S> <C> <C> <C> <C>
1991: Quarter 1 8.75% 5.92% 6.24% 8.26%
Quarter 2 8.50% 5.72% 6.35% 8.43%
Quarter 3 8.00% 5.22% 5.38% 7.80%
Quarter 4 6.50% 3.95% 4.10% 7.47%
1992: Quarter 1 6.50% 4.15% 4.53% 7.97%
Quarter 2 6.50% 3.65% 4.06% 7.79%
Quarter 3 6.00% 2.75% 3.06% 7.38%
Quarter 4 6.00% 3.15% 3.59% 7.40%
1993: Quarter 1 6.00% 2.95% 3.18% 6.93%
Quarter 2 6.00% 3.09% 3.45% 6.67%
Quarter 3 6.00% 2.97% 3.36% 6.03%
Quarter 4 6.00% 3.06% 3.59% 6.34%
1994: Quarter 1 6.25% 3.56% 4.44% 7.09%
Quarter 2 7.25% 4.22% 5.49% 7.61%
Quarter 3 7.75% 4.79% 5.94% 7.82%
Quarter 4 8.50% 5.71% 7.21% 7.88%
1995: Quarter 1 9.00% 5.86% 6.47% 7.43%
Quarter 2 9.00% 5.57% 5.63% 6.63%
Quarter 3 8.75% 5.42% 5.68% 6.51%
Quarter 4 8.50% 5.09% 5.14% 5.96%
1996: Quarter 1 8.25% 5.14% 5.38% 6.67%
Quarter 2 8.25% 5.16% 5.68% 6.87%
Quarter 3 8.25% 5.03% 5.69% 6.92%
Quarter 4 8.25% 5.18% 5.49% 6.64%
1997: Quarter 1 8.50% 5.32% 6.00% 7.10%
July 17, 1997 8.50% 5.03% 5.66% 6.47%
</TABLE>
(1) End of period data.
Source: SNL Securities.
<PAGE> 125
EXHIBIT II-3
Staten Island Savings Bank
A. Demographic Reports for Nation, State, MSA, County and Zip Codes
B. Personal Income by Major Source and Earnings by Industry
C. Full-Time and Part-Time Employees by Major Industry
D. Regional Economic Profile
<PAGE> 126
A. Demographic Reports for Nation, State, MSA, County and Zip Codes
<PAGE> 127
STATE DEMOGRAPHIC REPORT
STATE 00
STATE NAME UNITED STATES
<TABLE>
<S> <C> <C>
Population 1997 Age Distribution 1997 Average Disposable Income
- ---------- --------------------- ------------------------------
1980 226,542,204 0-4 7.2 Total $35,584
1990 248,709,873 5-9 7.4 Householder <35 $30,999
1997 267,805,150 10-14 7.1 Householder 35-44 $40,281
2002 281,208,787 15-19 7.1 Householder 45-54 $45,940
20-24 6.5 Householder 55-64 $39,611
Population Growth Rate 1 25-44 31.4 Householder 65+ $22,603
Households 45-64 20.5
- ---------- 65-84 11.3
1990 91,947,410 85+ 1.4 Spendinq Potential Index*
1997 99,019,931 18+ 74.3 -------------------------
2002 104,000,643 Auto Loan 100
Median Age Home Loan 100
Household Growth Rate 1 ---------- Investments 100
Average Household Size 2.64 1990 32.9 Retirement Plans 100
1997 34.8 Home Repair 100
Families Lawn & Garden 100
- -------- Male/Female Ratio 95.9 Remodeling 100
1990 64,517,947 Per Capita Income $18,100 Appliances 100
1997 68,999,546 Electronics 100
1997 Household Income* Furniture 100
Family Growth Rate 0.9 ---------------------- Restaurants 100
Base 99,019,225 Sporting Goods 100
Race 1990 1997 % <$15K 17.7 Theater/Concerts 100
- ---- ---- ---- % $15K-25K 14.4 Toys & Hobbies 100
% White 80.3 78.4 % $25K-50K 33.5 Travel 100
% Black 12.1 12.4 % $50K-100K 26.5 Video Rental 100
% Asian % $100K-150K 5.4 Apparel 100
/Pacffic ISI, 2.9 3.7 % >$150K 2.6 Auto Aftermarket 100
% Hispanic* 9 10-8 Health Insurance 100
Median Household Income Pets & Supplies 100
-----------------------
1997 $36,961
2002 $42,042
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current
dollars, including an adjustment for inflation or cost-of-living
increase.
* The Spending Potential Index (SPI) is calculated by CACI from the
Consumer Expenditure Survey, Bureau of Labor Statistics. The index
represents the ratio of the average amount spent locally to the average
U.S. spending for a product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 6/12/97
<PAGE> 128
STATE DEMOGRAPHIC REPORT
STATE 36
STATE NAME NEW YORK
<TABLE>
<S> <C> <C>
Population 1997 Age Distribution 1997 Average Disposable Income
- ---------- --------------------- ------------------------------
1980 17,558,165 0-4 6.9 Total $33,910
1990 17,990,455 5-9 7 Householder <35 $30,429
1997 18,191,341 10-14 6.7 Householder 35-44 $36,263
2002 18,332,121 15-19 6.6 Householder 45-54 $43,029
20-24 6.4 Householder 55-64 $39,393
Population Growth Rate 0.2 25-44 32.3 Householder 65+ $21,618
45-64 20.9
Households 65-84 11.7
- ---------- 85+ 1.5
1990 6,639,322 18+ 75.7
1997 6,699,651 Spending Potential Index*
2002 6,743,853 -------------------------
Median Age Auto Loan 101
Household Growth Rate 0.1 ---------- Home Loan 108
Average Household Size 2.63 1990 33.9 Investments 110
1997 35.3 Retirement Plans 106
Families Home Repair 103
- -------- Male/Female Ratio 93.8 Lawn & Garden 103
1990 4,489,312 Per Capita Income $18,504 Remodeling 96
1997 4,530,808 Appliances 101
1997 Household Income* Electronics 101
Family Growth Rate 0.1 ---------------------- Furniture 108
Base 6,699,533 Restaurants 104
Race 1990 1997 %<$15K 20-2 Sporting Goods 103
- ---- ---- ---- % $15K-25K 13.9 Theater/Concerts 105
% White 74.4 71.6 % $25K-50K 31-3 Toys & Hobbies 101
% Black 15.9 16.5 % $50K-1OOK 25.9 Travel 1ll
% Asian % $100K-l50K 5.5 Video Rental 100
/Pacific Isl. 3.9 5 % >$150K 3.2 Apparel 105
% Hispanic* 12.3 15-2 Auto Aftermarket 103
Median Household Income Health Insurance 100
----------------------- Pets & Supplies 101
1997 $36,341
2002 $38,815
</TABLE>
- -------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current
dollars, including an adjustment for inflation or cost-of-living
increase.
* The Spending Potential Index (SPI) is calculated by CACI from the
Consumer Expenditure Survey, Bureau of Labor Statistics. The index
represents the ratio of the average amount spent locally to the average
U.S. spending for a product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 6/12/97
<PAGE> 129
MSA DEMOGRAPHIC REPORT
MSA 5600
MSA NAME NEW YORK NY
<TABLE>
<S> <C> <C>
Population 1997 Age Distribution 1997 Average Disposable Income
- ---------- --------------------- ------------------------------
1980 8,274,961 0-4 7 Total $35,230
1990 8,546,846 5-9 6.7 Householder <35 $32,666
1997 8,659,129 10-14 6.3 Householder 35-44 $36,735
2002 8,736,913 15-19 6.2 Householder 45-54 $42,485
20-24 6.5 Householder 55-64 $40,248
Population Growth Rate 0.2 25-44 33.7 Householder 65+ $23,160
45-64 21
Households 65-84 11.1
- ---------- 85+ 1.5
1990 3,252,399 18+ 76.4 Spending Potential Index
1997 3,285,298 ------------------------
2002 3,308,952 Median Age Auto Loan 100
---------- Home Loan 114
Household Growth Rate 0.1 1990 34 Investments 111
Average Household Size 2.57 1997 35.2 Retirement Plans 106
Home Repair 106
Families Male/Female Ratio 91.5 Lawn & Garden 103
- -------- Per Capita Income $20,150 Remodeling 93
1990 2,051,867 Appliances 100
1997 2,067,092 1997 Household Income* Electronics 100
---------------------- Furniture 114
Family Growth Rate 0.1 Base 3,285,238 Restaurants 105
% <$15K 21.8 Sporting Goods 104
Race 1990 1997 % $15K-25K 13.1 Theater/Concerts 106
- ---- ---- ---- % $25K-50K 29.5 Toys & Hobbies 97
% White 56.5 52.6 % $50K-100K 25.3 Travel 117
% Black 26.3 26.6 % $100K-150K 6.2 Video Rental 102
% Asian % >$150K 4.1 Apparel 106
/Pacific Isl. 6.5 8.2 Auto Aftermarket 105
% Hispanic* 22.1 26.8 Median Household Income Health Insurance 97
----------------------- Pets & Supplies 100
1997 $36,298
2002 $39,559
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current
dollars, including an adjustment for inflation or cost-of-living
increase,
* The Spending Potential Index (SPI) is calculated by CACI from the
Consumer Expenditure Survey, Bureau of Labor Statistics. The index
represents the ratio of the average amount spent locally to the average
U.S. spending for a product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 6/12/97
<PAGE> 130
County and Zip Code Demographic Reports:
Richmond County (Staten Island)
<PAGE> 131
COUNTY DEMOGRAPHIC REPORT
STATE/COUNTY 36085
COUNTY NAME RICHMOND NY
<TABLE>
<CAPTION>
Population
- ----------
<S> <C>
1980 352,029
1990 378,977
1997 400,193
2002 414,816
Population Growth Rate 0.8
</TABLE>
<TABLE>
<CAPTION>
Households
- ----------
<S> <C>
1990 130,519
1997 137,672
2002 142,659
Household Growth Rate 0.7
Average Household Size 2.85
</TABLE>
<TABLE>
<CAPTION>
Families
- --------
<S> <C>
1990 99,059
1997 104,683
Family Growth Rate 0.8
</TABLE>
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 85 81.4
% Black 8.1 9.1
% Asian
/Pacific Isl. 4.5 6.4
% Hispanic* 8 10.8
</TABLE>
<TABLE>
<CAPTION>
1997 Age Distribution
- ---------------------
<S> <C>
0-4 7.3
5-9 7.7
10-14 7
15-19 6.1
20-24 5.5
25-44 33.7
45-64 21.2
65-84 10.3
85+ 1.2
18+ 74.4
</TABLE>
<TABLE>
<CAPTION>
Median Age
- ----------
<S> <C> <C>
1990 33.3
1997 34.7
Male/Female Ratio 94.5
Per Capita Income $19,101
</TABLE>
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 137,667
% Less Than $15K 14.8
% $15K-25K 9.5
% $25K-50K 29
% $50K-100K 36.3
% $100K-150K 7.8
% Greater Than $150K 2.6
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -----------------------
<S> <C>
1997 $46,775
2002 $51,385
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable Income
- ------------------------------
<S> <C>
Total $38,086
Householder Less Than 35 $36,100
Householder 35-44 $39,732
Householder 45-54 $48,085
Householder 55-64 $44,005
Householder 65+ $21,615
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
- -------------------------
<S> <C>
Auto Loan 103
Home Loan 113
Investments 108
Retirement Plans 109
Home Repair 102
Lawn & Garden 104
Remodeling 96
Appliances 103
Electronics 106
Furniture 112
Restaurants 112
Sporting Goods 107
Theater/Concerts 109
Toys & Hobbies 106
Travel 110
Video Rental 102
Apparel 112
Auto Aftermarket 108
Health Insurance 101
Pets & Supplies 105
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current
dollars, including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for
a product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 6/12/97
<PAGE> 132
ZIP CODE DEMOGRAPHIC REPORT
ZIP CODE 10305
POST OFFICE NAME STATEN ISLAND NY
<TABLE>
<CAPTION>
Population
- ----------
<S> <C>
1980 30,164
1990 30,513
1997 31,565
2002 32,433
Population Growth Rate 0.5
</TABLE>
<TABLE>
<CAPTION>
Households
- ----------
<S> <C>
1990 11,375
1997 11,775
2002 12,105
Household Growth Rate 0.5
Average Household Size 2.61
</TABLE>
<TABLE>
<CAPTION>
Families
- --------
<S> <C>
1990 8,112
1997 8,397
Family Growth Rate 0.5
</TABLE>
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 91.9 88.9
% Black 2.1 2.6
% Asian
/Pacific Isl. 4.1 6
% Hispanic* 8 11.4
</TABLE>
<TABLE>
<CAPTION>
1997 Age Distribution
- ---------------------
<S> <C>
0-4 6.7
5-9 6.4
10-14 5.9
15-19 5.2
20-24 5.1
25-44 33.7
45-64 21.7
65-84 13.7
85+ 1.5
18+ 77.9
</TABLE>
<TABLE>
<CAPTION>
Median Age
- ----------
<S> <C>
1990 35.1
1997 36.6
Male/Female Ratio 92.6
Per Capita Income $17,635
</TABLE>
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 11,774
% Less Than $15K 21.7
% $15K-25K 10.3
% $25K-50K 30.1
% $50K-100K 30.5
% $100K-150K 5.7
% Greater Than $150K 1.7
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -----------------------
<S> <C>
1997 $39,419
2002 $44,040
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable Income
- ------------------------------
<S> <C>
Total $33,050
Householder Less Than 35 $36,598
Householder 35-44 $37,255
Householder 45-54 $39,790
Householder 55-64 $38,892
Householder 65+ $18,000
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
- -------------------------
<S> <C>
Auto Loan 100
Home Loan 105
Investments 113
Retirement Plans 102
Home Repair 104
Lawn & Garden 103
Remodeling 94
Appliances 100
Electronics 99
Furniture 106
Restaurants 105
Sporting Goods 101
Theater/Concerts 104
Toys & Hobbies 103
Travel 108
Video Rental 99
Apparel 102
Auto Aftermarket 101
Health Insurance 102
Pets & Supplies 101
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 7/17/97
<PAGE> 133
ZIP CODE DEMOGRAPHIC REPORT
ZIP CODE 10304
POST OFFICE NAME STATEN ISLAND NY
<TABLE>
<CAPTION>
Population
- ----------
<S> <C>
1980 33,028
1990 33,028
1997 35,861
2002 37,518
Population Growth Rate 1.1
</TABLE>
<TABLE>
<CAPTION>
Households
- ----------
<S> <C>
1990 11,627
1997 12,607
2002 13,187
Household Growth Rate 1.1
Average Household Size 2.77
</TABLE>
<TABLE>
<CAPTION>
Families
- --------
<S> <C>
1990 8,346
1997 9,059
Family Growth Rate 1.1
</TABLE>
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 62.5 56.3
% Black 26.8 30.3
% Asian
/Pacific Isl. 4.6 6.2
% Hispanic* 13.4 16.9
</TABLE>
<TABLE>
<CAPTION>
1997 Age Distribution
- ---------------------
<S> <C>
0-4 8.3
5-9 9
10-14 7.6
15-19 6
20-24 5.4
25-44 32.3
45-64 19.6
65-84 10.3
85+ 1.6
18+ 71.6
</TABLE>
<TABLE>
<CAPTION>
Median Age
- ----------
<S> <C> <C>
1990 32.1
1997 33.2
Male/Female Ratio 88.1
Per Capita Income $17,031
</TABLE>
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 12,607
% Less Than $15K 27.3
% $15K-25K 11.6
% $25K-50K 25.8
% $50K-100K 26.2
% $100K-150K 5.4
% Greater Than $150K 3.6
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -----------------------
<S> <C>
1997 $34,232
2002 $37,497
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable Income
- ------------------------------
<S> <C>
Total $33,383
Householder Less Than 35 $26,418
Householder 35-44 $32,705
Householder 45-54 $45,923
Householder 55-64 $40,798
Householder 65+ $22,894
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
- -------------------------
<S> <C>
Auto Loan 100
Home Loan 114
Investments 119
Retirement Plans 115
Home Repair 106
Lawn & Garden 107
Remodeling 96
Appliances 100
Electronics 102
Furniture 108
Restaurants 102
Sporting Goods 105
Theater/Concerts 108
Toys & Hobbies 101
Travel 117
Video Rental 100
Apparel 107
Auto Aftermarket 105
Health Insurance 97
Pets & Supplies 101
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current
dollars, including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for
a product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 7/17/97
<PAGE> 134
ZIP CODE DEMOGRAPHIC REPORT
ZIP CODE 10314
POST OFFICE NAME STATEN ISLAND NY
<TABLE>
<CAPTION>
Population
- ----------
<S> <C>
1980 69,397
1990 78,118
1997 80,991
2002 83,333
Population Growth Rate 0.5
</TABLE>
<TABLE>
<CAPTION>
Households
- ----------
<S> <C>
1990 26,800
1997 27,850
2002 28,682
Household Growth Rate 0.5
Average Household Size 2.86
</TABLE>
<TABLE>
<CAPTION>
Families
- --------
<S> <C>
1990 20,837
1997 21,612
Family Growth Rate 0.5
</TABLE>
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 88.4 83.8
% Black 2.4 3
% Asian
/Pacific Isl. 7.8 11.4
% Hispanic* 5.8 8.2
</TABLE>
<TABLE>
<CAPTION>
1997 Age Distribution
- ---------------------
<S> <C>
0-4 6.9
5-9 7.5
10-14 7
15-19 6.2
20-24 5.2
25-44 34.6
45-64 21.5
65-84 10.1
85+ 1
18+ 74.9
</TABLE>
<TABLE>
<CAPTION>
Median Age
- ----------
<S> <C>
1990 33.8
1997 35.3
Male/Female Ratio 94.5
Per Capita Income $20,178
</TABLE>
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 27,847
% Less Than $15K 10.5
% $15K-25K 8.6
% $25K-50K 30.5
% $50K-100K 39
% $100K-l 50K 8.8
% Greater Than $l50K 2.7
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -----------------------
<S> <C>
1997 $50,359
2002 $54,657
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable Income
- ------------------------------
<S> <C>
Total $40,324
Householder Less Than 35 $38,694
Householder 35-44 $40,959
Householder 45-54 $50,928
Householder 55-64 $45,754
Householder 65+ $22,092
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
- -------------------------
<S> <C>
Auto Loan 104
Home Loan 112
Investments 102
Retirement Plans 107
Home Repair 99
Lawn & Garden 101
Remodeling 95
Appliances 103
Electronics 107
Furniture 110
Restaurants 113
Sporting Goods 107
Theater/Concerts 108
Toys & Hobbies 107
Travel 106
Video Rental 102
Apparel 111
Auto Aftermarket 108
Health Insurance 101
Pets & Supplies 106
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 7/17/97
<PAGE> 135
ZIP CODE DEMOGRAPHIC REPORT
ZIP CODE 10308
POST OFFICE NAME STATEN ISLAND NY
<TABLE>
<CAPTION>
Population
- ----------
<S> <C>
1980 23,351
1990 24,955
1997 26,475
2002 27,459
Population Growth Rate 0.8
</TABLE>
<TABLE>
<CAPTION>
Households
- ----------
<S> <C>
1990 8,307
1997 8,797
2002 9,119
Household Growth Rate 0.8
Average Household Size 3.01
</TABLE>
<TABLE>
<CAPTION>
Families
- --------
<S> <C>
1990 6,858
1997 7,269
Family Growth Rate 0.8
</TABLE>
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 97 95.5
% Black 0.2 0.2
% Asian
/Pacific Isl. 2.3 3.4
% Hispanic* 4 5.9
</TABLE>
<TABLE>
<CAPTION>
1997 Age Distribution
- ---------------------
<S> <C>
0-4 7.2
5-9 7.5
10-14 6.8
15-19 6.4
20-24 6
25-44 34.1
45-64 23.5
65-84 7.9
85+ 0.6
18+ 74.8
</TABLE>
<TABLE>
<CAPTION>
Median Age
- ----------
<S> <C> <C>
1990 32.9
1997 34.5
Male/Female Ratio 96.1
Per Capita Income $20,600
</TABLE>
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 8,798
% Less Than $15K 9.3
% $15K-25K 6.4
% $25K-50K 29.5
% $50K-100K 43.3
% $100K-150K 9.3
% Greater Than $150K 2.2
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -----------------------
<S> <C>
1997 $53,358
2002 $57,876
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable Income
- ------------------------------
<S> <C>
Total $41,902
Householder Less Than 35 $40,267
Householder 35-44 $41,141
Householder 45-54 $49,691
Householder 55-64 $46,999
Householder 65+ $25,282
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
- -------------------------
<S> <C>
Auto Loan 107
Home Loan 115
Investments 108
Retirement Plans 113
Home Repair 102
Lawn & Garden 106
Remodeling 100
Appliances 106
Electronics 111
Furniture 116
Restaurants 120
Sporting Goods 111
Theater/Concerts 113
Toys & Hobbies 112
Travel 110
Video Rental 103
Apparel 120
Auto Aftermarket 112
Health Insurance 103
Pets & Supplies 108
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 7/17/97
<PAGE> 136
ZIP CODE DEMOGRAPHIC REPORT
ZIP Code 10310
POST OFFICE NAME STATEN ISLAND NY
<TABLE>
<CAPTION>
Population
- ----------
<S> <C>
1980 21,316
1990 20,282
1997 20,337
2002 20,697
Population Growth Rate 0
</TABLE>
<TABLE>
<CAPTION>
Households
- ----------
<S> <C>
1990 7,265
1997 7,296
2002 7,429
Household Growth Rate 0.1
Average Household Size 2.78
</TABLE>
<TABLE>
<CAPTION>
Families
- --------
<S> <C>
1990 5,215
1997 5,235
Family Growth Rate 0.1
</TABLE>
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 71.2 67.3
% Black 21.1 23.1
% Asian
/Pacific Isl. 3.3 4.5
% Hispanic* 12.5 16.1
</TABLE>
<TABLE>
<CAPTION>
1997 Age Distribution
- ---------------------
<S> <C>
0-4 7.9
5-9 8.5
10-14 7.4
15-19 6.1
20-24 5.4
25-44 31.8
45-64 19.6
65-84 12
85+ 1.3
18+ 72.5
</TABLE>
<TABLE>
<CAPTION>
Median Age
- ----------
<S> <C> <C>
1990 32.8
1997 34.4
Male/Female Ratio 91.2
Per Capita Income $17,506
</TABLE>
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 7,294
% Less Than $15K 20.1
% $15K-25K 12.3
% $25K-50K 27.6
% $50K-100K 31.4
% $100K-150K 6.5
% Greater Than $150K 2.2
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -----------------------
<S> <C>
1997 $39,955
2002 $44,566
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable Income
- ------------------------------
<S> <C>
Total $34,040
Householder Less Than 35 $32,158
Householder 35-44 $37,991
Householder 45-54 $42,963
Householder 55-64 $40,370
Householder 65+ $21,292
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
- -------------------------
<S> <C>
Auto Loan 100
Home Loan 110
Investments 116
Retirement Plans 107
Home Repair 105
Lawn & Garden 104
Remodeling 93
Appliances 101
Electronics 102
Furniture 109
Restaurants 104
Sporting Goods 103
Theater/Concerts 106
Toys & Hobbies 102
Travel 112
Video Rental 100
Apparel 107
Auto Aftermarket 105
Health Insurance 99
Pets & Supplies 102
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 7/17/97
<PAGE> 137
ZIP CODE DEMOGRAPHIC REPORT
ZIP CODE 10306
POST OFFICE NAME STATEN ISLAND NY
<TABLE>
<CAPTION>
Population
- ----------
<S> <C>
1980 50,093
1990 49,849
1997 52,035
2002 53,665
Population Growth Rate 0.6
</TABLE>
<TABLE>
<CAPTION>
Households
- ----------
<S> <C>
1990 17,552
1997 18,318
2002 18,891
Household Growth Rate 0.6
Average Household Size 2.81
</TABLE>
<TABLE>
<CAPTION>
Families
- --------
<S> <C>
1990 13,499
1997 14,084
Family Growth Rate 0.6
</TABLE>
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 95.1 92.8
% Black 0.8 1.2
% Asian
/Pacific Isl. 3 4.6
% Hispanic* 5.5 8.1
</TABLE>
<TABLE>
<CAPTION>
1997 Age Distribution
- ---------------------
<S> <C>
0-4 6.5
5-9 6.7
10-14 6.1
15-19 5.7
20-24 5.8
25-44 31
45-64 24.4
65-84 12.5
85+ 1,3
18+ 77.4
</TABLE>
<TABLE>
<CAPTION>
Median Age
- ----------
<S> <C> <C>
1990 35.5
1997 37.2
Male/Female Ratio 91.4
Per Capita Income $19,945
</TABLE>
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 18,318
% Less Than $15K 14.2
% $15K-25K 8.9
% $25K-50K 29.2
% $50K-100K 37.1
% $100K-150K 8.5
% Greater Than $150K 2.1
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -----------------------
<S> <C>
1997 $47,824
2002 $52,311
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable Income
- ------------------------------
<S> <C>
Total $38,485
Householder Less Than 35 $37,970
Householder 35-44 $39,596
Householder 45-54 $49,308
Householder 55-64 $45,733
Householder 65+ $21,173
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
- -------------------------
<S> <C>
Auto Loan 104
Home Loan 117
Investments 118
Retirement Plans 115
Home Repair 106
Lawn & Garden 110
Remodeling 97
Appliances 105
Electronics 109
Furniture 115
Restaurants 116
Sporting Goods 108
Theater/Concerts 115
Toys & Hobbies 109
Travel 116
Video Rental 102
Apparel 115
Auto Aftermarket 1ll
Health Insurance 104
Pets & Supplies 106
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the ratio
of the average amount spent locally to the average U.S. spending for a product
or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX (703) 243-6272 7/17/97
<PAGE> 138
ZIP CODE DEMOGRAPHIC REPORT
ZIP CODE 10312
POST OFFICE NAME STATEN ISLAND NY
<TABLE>
<CAPTION>
Population
- ----------
<S> <C>
1980 41,382
1990 49,576
1997 51,904
2002 53,650
Population Growth Rate 0.6
</TABLE>
<TABLE>
<CAPTION>
Households
- ----------
<S> <C>
1990 15,450
1997 16,158
2002 16,693
Household Growth Rate 0.6
Average Household Size 3.21
</TABLE>
<TABLE>
<CAPTION>
Families
- --------
<S> <C>
1990 13,239
1997 13,846
Family Growth Rate 0.6
</TABLE>
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 95.2 93
% Black 0.5 0.7
% Asian
/Pacific Isl. 3.5 5.2
% Hispanic* 4.7 6.9
</TABLE>
<TABLE>
<CAPTION>
1997 Ace Distribution
- ---------------------
<S> <C>
0-4 7.1
5-9 8.3
10-14 8.2
15-19 6.9
20-24 5.7
25-44 34.4
45-64 22.1
65-84 6.8
85+ 0.5
18+ 72.3
</TABLE>
<TABLE>
<CAPTION>
Median Age
- ----------
<S> <C> <C>
1990 32.3
1997 34
Male/Female Ratio 97.2
Per Capita Income $20,454
</TABLE>
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 16,158
% Less Than $15K 7.5
% $15K-25K 5.8
% $25K-50K 27.2
% $50K-100K 44.9
% $100K-150K 11.2
% Greater Than $150K 3.4
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -----------------------
<S> <C>
1997 $57,836
2002 $62,322
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable Income
- ------------------------------
<S> <C>
Total $44,440
Householder Less Than 35 $41,749
Householder 35-44 $45,123
Householder 45-54 $53,283
Householder 55-64 $49,695
Householder 65+ $22,927
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
- -------------------------
<S> <C>
Auto Loan 108
Home Loan 117
Investments 105
Retirement Plans 115
Home Repair 101
Lawn & Garden 106
Remodeling 101
Appliances 107
Electronics 114
Furniture 118
Restaurants 123
Sporting Goods 113
Theater/Concerts 115
Toys & Hobbies 113
Travel 110
Video Rental 104
Apparel 123
Auto Aftermarket 115
Health Insurance 102
Pets & Supplies 109
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 7/17/97
<PAGE> 139
ZIP CODE DEMOGRAPHIC REPORT
ZIP CODE 10302
POST OFFICE NAME STATEN ISLAND NY
<TABLE>
<CAPTION>
Population
- ----------
<S> <C>
1980 13,845
1990 13,369
1997 13,900
2002 14,314
Population Growth Rate 0.5
</TABLE>
<TABLE>
<CAPTION>
Households
- ----------
<S> <C>
1990 4,645
1997 4,817
2002 4,957
Household Growth Rate 0.5
Average Household Size 2.86
</TABLE>
<TABLE>
<CAPTION>
Families
- --------
<S> <C>
1990 3,456
1997 3,585
Family Growth Rate 0.5
</TABLE>
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 77.4 72.8
% Black 15 2 17.7
% Asian
/Pacific Isl. 2 2.8
% Hispanic* 12 16.1
</TABLE>
<TABLE>
<CAPTION>
1997 Age Distribution
- ---------------------
<S> <C>
0-4 7.7
5-9 7.5
10-14 6.6
15-19 5.9
20-24 6.1
25-44 32.1
45-64 21.2
65-84 12
85+ 0.9
18+ 74.7
</TABLE>
<TABLE>
<CAPTION>
Median Age
- ----------
<S> <C> <C>
1990 33.2
1997 34.7
Male/Female Ratio 97.9
Per Capita Income $16,180
</TABLE>
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 4,816
% Less Than $15K 15.8
% $15K-25K 12.3
% $25K-50K 33.1
% $50K-100K 32.6
% $100K-150K 5.3
% Greater Than $150K 0.9
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -----------------------
<S> <C>
1997 $40,918
2002 $45,413
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable Income
- ------------------------------
<S> <C>
Total $33,172
Householder Less Than 35 $33,674
Householder 35-44 $34,834
Householder 45-54 $40,434
Householder 55-64 $39,048
Householder 65+ $20,075
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
- -------------------------
<S> <C>
Auto Loan 98
Home Loan 100
Investments 106
Retirement Plans 97
Home Repair 101
Lawn & Garden 99
Remodeling 90
Appliances 100
Electronics 97
Furniture 105
Restaurants 99
Sporting Goods 99
Theater/Concerts 101
Toys & Hobbies 100
Travel 104
Video Rental 100
Apparel 102
Auto Aftermarket 101
Health Insurance 97
Pets & Supplies 100
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 7/17/97
<PAGE> 140
ZIP CODE DEMOGRAPHIC REPORT
ZIP CODE 10301
POST OFFICE NAME STATEN ISLAND NY
<TABLE>
<S> <C>
Population
- ----------
1980 36,886
1990 35,314
1997 35,560
2002 36,187
</TABLE>
Population Growth Rate 0.1
<TABLE>
<S> <C>
Households
- ----------
1990 13,550
1997 13,635
2002 13,880
</TABLE>
Household Growth Rate 0.1
Average Household Size 2.46
<TABLE>
<S> <C>
Families
- --------
1990 8,332
1997 8,399
</TABLE>
Family Growth Rate 0.1
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 70 65
% Black 19.6 21.8
% Asian
/Pacific Isl. 5.2 7.1
% Hispanic* 12.8 16.5
</TABLE>
1997 Age Distribution
- ---------------------
<TABLE>
<S> <C>
0-4 6.8
5-9 6.7
10-14 5.9
15-19 5.6
20-24 5.9
25-44 33.7
45-64 19.7
65-84 13.1
85+ 2.5
18+ 77.5
</TABLE>
<TABLE>
<S> <C>
Median Age
- ----------
1990 34.3
1997 35.9
</TABLE>
Male/Female Ratio 92.9
Per Capita Income $19,621
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 13,635
% less than $15K 18.1
% $15K-25K 12.3
% $25K-5OK 29.9
% $50K-100K 30.6
% $100K-150K 6
% greater than $150K 3.1
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -------------------------
<S> <C>
1997 $39,948
2002 $44,371
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable income
- ------------------------------
<S> <C>
Total $35,375
Householder less than 35 $30,988
Householder 35-44 $38,917
Householder 45-54 $45,883
Householder 55-64 $41,879
Householder 65+ $23,333
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
-------------------------
<S> <C>
Auto Loan 100
Home Loan 114
Investments 113
Retirement Plans 107
Home Repair 104
Lawn & Garden 103
Remodeling 93
Appliances 100
Electronics 101
Furniture 110
Restaurants 105
Sporting Goods 103
Theater/Concerts 106
Toys & Hobbies 100
Travel 114
Video Rental 101
Apparel 106
Auto Aftermarket 105
Health Insurance 98
Pets & Supplies 102
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 7/17/97
<PAGE> 141
ZIP CODE DEMOGRAPHIC REPORT
ZIP CODE 10309
POST OFFICE NAME STATEN ISLAND NY
<TABLE>
<S> <C>
Population
- ----------
1980 11,122
1990 18,651
1997 24,123
2002 26,856
</TABLE>
Population Growth Rate 3.6
<TABLE>
<S> <C>
Households
- ----------
1990 5,497
1997 7,241
2002 8,112
</TABLE>
Household Growth Rate 3.9
Average Household Size 3.17
<TABLE>
<S> <C>
Families
- --------
1990 4,661
1997 6,140
</TABLE>
Family Growth Rate 3.9
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 91.5 88.8
% Black 4.2 4.7
% Asian
/Pacific Isl. 3.4 5.3
% Hispanic* 5.5 7.9
</TABLE>
<TABLE>
<S> <C>
1997 Age Distribution
- ---------------------
0-4 9.1
5-9 8.9
10-14 7.6
15-19 6.4
20-24 5.2
25-44 39.2
45-64 17.4
65-84 5.8
85+ 0.4
18+ 70.5
</TABLE>
<TABLE>
<S> <C>
Median Age
- ----------
1990 30.8
1997 31.9
</TABLE>
Male/Female Ratio 109.5
Per Capita Income $19,783
<TABLE>
<S> <C>
1997 Household Income*
- ----------------------
Base 7,243
% less than $15K 7.1
% $15K-25K 7.2
% $25K-50K 27.4
% $50K-100K 44
% $100K-l50K 10
% greater than $l50K 4.3
</TABLE>
<TABLE>
<S> <C>
Median Household Income
- -----------------------
1997 $56,533
2002 $61,398
</TABLE>
<TABLE>
<S> <C>
1997 Average Disposable Income
- ------------------------------
Total $44,787
Householder less than 35 $42,009
Householder 35-44 $44,385
Householder 45-54 $52,859
Householder 55-64 $49,494
Householder 65+ $27,226
</TABLE>
<TABLE>
<S> <C>
Spending Potential Index*
-------------------------
Auto Loan 107
Home Loan 116
Investments 100
Retirement Plans 110
Home Repair 99
Lawn & Garden 103
Remodeling 98
Appliances 106
Electronics 112
Furniture 116
Restaurants 121
Sporting Goods 111
Theater/Concerts 112
Toys & Hobbies 111
Travel 107
Video Rental 104
Apparel 119
Auto Aftermarket 113
Health Insurance 101
Pets & Supplies 109
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 7/17/97
<PAGE> 142
County and Zip Code Demographic Reports:
Kings County (Brooklyn)
<PAGE> 143
COUNTY DEMOGRAPHIC REP0RT
STATE/COUNTY 36047
COUNTY NAME KINGS NY
<TABLE>
<CAPTION>
Population
- ----------
<S> <C>
1980 2,231,028
1990 2,300,664
1997 2,268,273
2002 2,246,217
</TABLE>
Population Growth Rate -0.2
<TABLE>
<CAPTION>
Households
- ----------
<S> <C>
1990 828,199
1997 810,574
2002 799,216
</TABLE>
Household Growth Rate -0.3
Average Household Size 2.76
<TABLE>
<CAPTION>
Families
- --------
<S> <C>
1990 555,284
1997 543,708
</TABLE>
Family Growth Rate -0.3
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 46.9 43
% Black 37.9 38.4
% Asian
/Pacific Isl. 4.8 6
% Hispanic* 20.1 24.9
</TABLE>
<TABLE>
<CAPTION>
1997 Age Distribution
- ---------------------
<S> <C>
0-4 8.1
5-9 7.2
10-14 6.9
15-19 7.2
20-24 7.7
25-44 32.4
45-64 19
65-84 10.2
85+ 1.3
18+ 73.6
</TABLE>
<TABLE>
<CAPTION>
Median Age
- ----------
<S> <C>
1990 32.3
1997 32.5
</TABLE>
Male/Female Ratio 90.1
Per Capita Income $14,742
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 810,564
% less than $15K 27.1
% $15K-25K 15.1
% $25K-50K 30.2
% $50K-100K 21.7
% $100K- 150K 4.2
% greater than $150K 1.7
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -----------------------
<S> <C>
1997 $29,778
2002 $34,472
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable Income
- ------------------------------
<S> <C>
Total $28,741
Householder less than 35 $27,737
Householder 35-44 $30,440
Householder 45-54 $34,910
Householder 55-64 $33,445
Householder 65+ $18,807
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
- -------------------------
<S> <C>
Auto Loan 97
Home Loan 105
Investments 100
Retirement Plans 93
Home Repair 105
Lawn & Garden 97
Remodeling 89
Appliances 97
Electronics 93
Furniture 110
Restaurants 96
Sporting Goods 98
Theater/Concerts 100
Toys & Hobbies 91
Travel 114
Video Rental 101
Apparel 99
Auto Aftermarket 99
Health Insurance 94
Pets & Supplies 96
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX (703) 243-6272 6/12/97
<PAGE> 144
ZIP CODE DEMOGRAPHIC REPORT
ZIP CODE 11209
POST OFFICE NAME BROOKLYN NY
<TABLE>
<CAPTION>
Population
- ----------
<S> <C>
1980 66,035
1990 62,346
1997 60,437
2002 59,700
</TABLE>
Population Growth Rate -0.4
<TABLE>
<CAPTION>
Households
- ----------
<S> <C>
1990 29,714
1997 28,727
2002 28,276
</TABLE>
Household Growth Rate -0.5
Average Household Size 2.1
<TABLE>
<CAPTION>
Families
- --------
<S> <C>
1990 15,699
1997 15,119
</TABLE>
Family Growth Rate -0.5
<TABLE>
<CAPTION>
Race 1990 1997
- ---- ---- ----
<S> <C> <C>
% White 91 86.7
% Black 0.7 0.9
% Asian
/Pacific Isl. 6.4 9.2
% Hispanic* 6.6 10.6
</TABLE>
<TABLE>
<CAPTION>
1997 Age Distribution
- ---------------------
<S> <C>
0-4 5.1
5-9 4.1
10-14 4
15-19 4.5
20-24 6.5
25-44 34.7
45-64 21.7
65-84 16.8
85+ 2.6
18+ 84.1
</TABLE>
<TABLE>
<CAPTION>
Median Age
- ----------
<S> <C>
1990 39.1
1997 39.2
</TABLE>
Male/Female Ratio 90.1
Per Capita Income $24,247
<TABLE>
<CAPTION>
1997 Household Income*
- ----------------------
<S> <C>
Base 28,727
% less than $15K 18.9
% $15K-25K 12.7
% $25K-50K 31.5
% $50K-100K 26.6
% $100K-1 50K 6.6
% greater than $150K 3.6
</TABLE>
<TABLE>
<CAPTION>
Median Household Income
- -----------------------
<S> <C>
1997 $38,064
2002 $42,994
</TABLE>
<TABLE>
<CAPTION>
1997 Average Disposable Income
- ------------------------------
<S> <C>
Total $35,376
Householder less than 35 $37,133
Householder 35-44 $40,072
Householder 45-54 $45,201
Householder 55-64 $42,142
Householder 65+ $22,114
</TABLE>
<TABLE>
<CAPTION>
Spending Potential Index*
- -------------------------
<S> <C>
Auto Loan 98
Home Loan 108
Investments 1ll
Retirement Plans 99
Home Repair 109
Lawn & Garden 102
Remodeling 90
Appliances 98
Electronics 95
Furniture 110
Restaurants 101
Sporting Goods 99
Theater/Concerts 103
Toys & Hobbies 95
Travel 116
Video Rental 100
Apparel 100
Auto Aftermarket 100
Health Insurance 99
Pets & Supplies 98
</TABLE>
- --------------------------------------------------------------------------------
* Persons of Hispanic Origin may be of any race.
* Income represents the annual income for the preceding year in current dollars,
including an adjustment for inflation or cost-of-living increase.
* The Spending Potential Index (SPI) is calculated by CACI from the Consumer
Expenditure Survey, Bureau of Labor Statistics. The index represents the
ratio of the average amount spent locally to the average U.S. spending for a
product or service, multiplied by 100.
- --------------------------------------------------------------------------------
Copyright 1997 CACI (800) 292-CACI FAX: (703) 243-6272 6/13/97
<PAGE> 145
B. Personal Income by Major Source and Earnings by Industry
<PAGE> 146
April 28, 1997
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
For Counties and Metropolitan Areas
(thousands of dollars)
(36-000) NEW YORK
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Line Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income by place of residence
010 Total personal income ($000) 377,342,418 401,833,272 413,644,570 436,839,110 451,124,875 467,397,414
011 Nonfarm personal income 376,568,113 401,053,887 412,935,227 436,058,443 450,248,615 466,745,146
012 Farm income 2/ 774,305 779,385 709,343 780,667 876,260 652,268
020 Population (thousands) 3/ 17,983.2 18,002.3 18,040.8 18,095.2 18,154.5 18,172.6
030 Per capita personal income (dollars) 20,983 22,321 22,928 24,141 24,849 25,720
Derivation of total personal income
040 Earnings by place of work 278,157,851 295,488,397 299,460,485 319,353,218 328,692,513 339,514,656
041 Less: Personal cont. for social insur. 4/ 20,365,962 21,578,469 22,937,717 23,805,819 24,603,525 25,962,007
042 Plus: Adjustment for residence 5/ -12,766,709 -13,309,190 -13,086,078 -15,143,634 -15,130,933 -15,313,626
045 Equals: Net earn. by place of residence 245,025,180 260,600,738 263,436,690 280,403,865 288,958,055 298,239,033
046 Plus: Dividends, interest, and rent 6/ 73,504,765 76,631,812 77,101,374 73,951,592 74,139,211 77,306,029
047 Plus: Transfer payments 58,812,473 64,600,722 73,106,506 82,483,653 88,027,609 91,852,352
Earnings by place of work
Components of Earnings:
050 Wages and salaries 233,175,026 245,454,911 245,008,157 259,282,702 264,104,942 271,101,923
060 Other labor income 19,852,710 21,491,868 23,277,468 25,388,315 27,104,761 28,528,284
070 Proprietors' income 7/ 25,130,115 28,541,618 31,174,860 34,682,201 37,482,810 39,884,459
071 Farm proprietors' income 492,164 450,102 383,939 458,367 523,137 309,661
072 Nonfarm proprietors' income 24,637,951 28,091,516 30,790,921 34,223,834 36,959,673 39,574,798
Earnings by Industry:
081 Farm earnings 774,305 779,385 709,343 780,667 876,260 652,268
082 Nonfarm earnings 277,383,546 294,709,012 298,751,142 318,572,551 327,816,253 338,862,398
090 Private earnings 233,703,860 247,436,485 250,609,905 268,969,414 276,493,798 285,874,115
0 Ag. serv., for., fish., and other 8/ 878,730 980,704 1,042,756 1,034,820 1,098,643 1,167,363
130 Mining 310,096 300,001 256,801 261,602 277,537 296,798
180 Construction 13,822,104 13,613,913 12,291,100 11,334,364 11,527,942 12,265,826
190 Manufacturing 42,792,569 43,157,744 43,110,238 43,910,279 43,384,433 43,713,022
0 Nondurable goods 18,259,096 18,656,102 18,734,150 19,576,677 19,556,729 20,052,307
310 Durable goods 24,533,473 24,501,642 24,376,088 24,333,602 23,827,704 23,660,715
440 Transportation and public utilities 16,554,476 18,058,010 18,396,298 18,880,993 19,142,011 19,959,812
510 Wholesale trade 18,644,922 19,298,155 18,820,810 19,695,526 19,752,728 20,362,940
0 Retail trade 21,858,214 22,215,561 22,052,246 22,638,161 22,876,255 24,032,441
0 Finance, insurance, and real estate 36,439,517 40,274,845 43,555,056 54,080,574 56,736,039 56,396,478
560 Services 82,403,232 89,537,552 91,084,600 97,133,095 101,698,210 107,679,435
630 Government and government enterprises 43,679,686 47,272,527 48,141,237 49,603,137 51,322,455 52,988,283
640 Federal, civilian 5,255,842 5,753,492 5,996,404 6,344,285 6,443,579 6,555,784
0 Military 1,043,816 1,072,948 1,153,604 1,189,469 1,169,106 1,096,230
0 State and local 37,380,028 40,446,087 40,991,229 42,069,383 43,709,770 45,336,269
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CADS June 1996 BUREAU OF ECONOMIC ANALYSIS
</TABLE>
<PAGE> 147
April 28, 1997
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
For Counties and Metropolitan Areas
(thousands of dollars)
<TABLE>
<CAPTION>
(36-085) RICHMOND NEW YORK
- -------------------------------------------------------------------------------------------------------------------------------
Line Item 1989 1990 1991 1992 1993 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income by place of
residence
010 Total personal income ($000) 7,776,692 8,348,538 8,731,126 9,213,517 9,585,241 9,949,211
011 Nonfarm personal income 7,776,692 8,348,538 8,731,126 9,213,517 9,585,241 9,949,211
012 Farm income 2/ 0 0 0 0 0 0
020 Population (thousands) 3/ 377.8 380.0 385.4 390.9 395.7 397.7
030 Per capita personal
income (dollars) 20,584 21,970 22,657 23,571 24,226 25,015
Derivation of total personal
income
040 Earnings by place of work 2,007,183 2,208,681 2,311,522 2,442,802 2,606,881 2,782,556
041 Less: Personal cont. for social
insur. 4/ 163,941 175,946 192,743 197,867 213,607 233,411
042 Plus: Adjustment for residence
5/ 3,534,359 3,681,753 3,748,892 3,895,917 3,943,513 3,981,975
045 Equals: Net earn. by place
of residence 5,377,601 5,714,488 5,867,671 6,140,852 6,336,787 6,531,120
046 Plus: Dividends, interest,
and rent 6/ 1,098,974 1,145,495 1,097,424 967,658 985,838 1,031,807
047 Plus: Transfer payments 1,300,117 1,488,554 1,766,031 2,105,007 2,262,616 2,386,284
Earnings by place of work
Components of Earnings:
050 Wages and salaries 1,623,090 1,750,132 1,789,660 1,878,574 1,981,233 2,108,749
060 Other labor income 129,816 143,693 159,761 175,126 194,386 213,393
070 Proprietors' income 7/ 254,277 314,856 362,101 389,102 431,262 460,414
071 Farm proprietors' income 0 0 0 0 0 0
072 Nonfarm proprietors' income 254,277 314,856 362,101 389,102 431,262 460,414
Earnings by Industry:
081 Farm earnings 0 0 0 0 0 0
082 Nonfarm earnings 2,007,183 2,208,681 2,311,522 2,442,802 2,606,881 2,782,556
090 Private earnings 1,796,827 1,966,251 2,066,053 2,178,171 2,340,479 2,514,955
XXX Ag. serv.,for.,fish.,and
other 8/ 8,701 9,472 10,328 10,556 12,620 13,424
130 Mining (L) (L) (L) (L) (L) (L)
180 Construction 200,322 204,644 198,024 194,505 209,960 222,772
190 Manufacturing 114,497 112,815 93,571 92,180 88,008 94,722
XXX Nondurable goods 83,970 81,404 61,929 59,842 58,469 63,548
310 Durable goods 30,527 31,411 31,642 32,338 29,539 31,174
440 Transportation and public
utilities 171,444 193,562 202,189 209,712 226,547 252,825
510 Wholesale trade 53,946 56,788 62,496 64,426 65,807 67,216
XXX Retail trade 260,431 264,351 270,611 272,341 279,635 296,968
XXX Finance, insurance, and
real estate 115,195 168,644 211,010 231,940 261,878 272,274
560 Services 872,285 955,970 1,017,816 1,102,505 1,196,018 1,294,745
630 Government and government
enterprises 210,356 242,430 245,469 264,631 266,402 267,601
640 Federal, civilian 34,323 36,652 38,471 42,041 40,913 43,831
XXX Military 8,368 12,225 20,803 34,677 46,063 24,183
XXX State and local 167,665 193,553 186,195 187,913 179,426 199,587
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CADS June 1996 BUREAU OF ECONOMIC ANALYSIS
<PAGE> 148
April 28, 1997
PERSONAL INCOME BY MAJOR SOURCE AND EARNINGS BY INDUSTRY 1/
For Counties and Metropolitan Areas
(thousands of dollars)
<TABLE>
<CAPTION>
(36-047) KINGS NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------------
Line Item 1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income by place of residence
010 Total personal income ($000) 37,105,853 39,735,054 40,815,759 43,366,542 44,309,232 45,710,625
011 Nonfarm personal income 37,105,853 39,735,054 40,815,759 43,366,542 44,309,232 45,710,625
012 Farm income 2/ 0 0 0 0 0 0
020 Population (thousands) 3/ 2,299.5 2,298.3 2,287.8 2,281.4 2,279.5 2,272.0
030 Per capita personal income (dollars) 16,137 17,289 17,841 19,008 19,438 20,119
Derivation of total personal income
040 Earnings by place of work 11,449,037 12,328,359 12,528,763 13,346,366 13,965,875 14,701,016
041 Less: Personal cont. for social insur. 4/ 962,537 1,008,871 1,078,412 1,113,803 1,178,295 1,270,070
042 Plus: Adjustment for residence 5/ 12,102,044 12,823,549 12,437,397 13,673,314 13,586,846 13,528,835
045 Equals: Net earn. by place of residence 22,588,544 24,143,037 23,887,748 25,905,877 26,374,426 26,959,781
046 Plus: Dividends, interest, and rent 6/ 5,826,853 5,957,070 5,957,238 5,208,030 4,798,574 5,014,844
047 Plus: Transfer payments 8,690,456 9,634,947 10,970,773 12,252,635 13,136,232 13,736,000
Earnings by place of work
Components of Earnings:
050 Wages and salaries 9,717,682 10,332,841 10,429,532 10,994,618 11,410,462 11,966,184
060 Other labor income 807,941 881,770 967,938 1,060,409 1,159,329 1,237,982
070 Proprietors' income 7/ 923,414 1,113,748 1,131,293 1,291,339 1,396,084 1,496,850
071 Farm proprietors' income 0 0 0 0 0 0
072 Nonfarm proprietors' income 923,414 1,113,748 1,131,293 1,291,339 1,396,084 1,496,850
Earnings by Industry:
081 Farm earnings 0 0 0 0 0 0
082 Nonfarm earnings 11,449,037 12,328,359 12,528,763 13,346,366 13,965,875 14,701,016
Private earnings 10,142,503 10,878,618 11,032,980 11,781,719 12,374,539 13,022,205
Ag. serv., for ., fish., and other 8/ 31,988 35,650 38,235 39,788 43,915 46,926
130 Mining 1,795 2,580 1,053 363 125 123
180 Construction 780,682 758,358 698,352 679,113 674,764 723,399
Manufacturing 1,655,476 1,616,577 1,566,559 1,526,351 1,500,080 1,506,825
Nondurable goods 1,032,559 1,012,042 1,011,955 990,689 989,651 1,009,124
10 Durable goods 622,917 604,535 554,604 535,662 510,429 497,701
40 Transportation and public utilities 852,160 942,694 968,022 1,022,855 1,060,448 1,137,502
Wholesale trade 815,314 896,266 908,129 974,179 998,628 1,054,234
Retail trade 1,220,748 1,232,248 1,196,460 1,203,967 1,187,745 1,217,920
Finance, insurance, and real estate 563,642 705,865 731,192 1,039,284 1,271,603 1,308,498
60 Services 4,220,698 4,688,380 4,924,978 5,295,819 5,637,231 6,026,778
30 Government and government enterprises 1,306,534 1,449,741 1,495,783 1,564,647 1,591,336 1,678,811
Federal, civilian 381,261 419,954 447,063 474,874 474,083 489,061
Military 78,687 82,684 83,234 94,482 91,329 74,427
60 State and local 846,586 947,103 965,486 995,291 1,025,924 1,115,323
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA05 June 1996 BUREAU OF ECONOMIC ANALYSIS
<PAGE> 149
Footnotes for Table CA05
1) 1969-74 based on 1967 SIC. 1975-87 based on 1972 SIC. 1988-94 based on 1987
SIC.
2) Farm income consists of proprietors' net farm income, the wages of hired
farm labor, the pay-in-kind of hired farm labor, and the salaries of
officers of corporate farms.
3) Census Bureau midyear population estimates. Estimates for 1990-94 reflect
county population estimates available as of October 1995.
4) Personal contributions for social insurance are included in earnings by
type and industry but excluded from personal income.
5) U.S. adjustment for residence consists of adjustments for border workers;
income of U.S. residents commuting outside U.S. borders to work less
income of foreign residents commuting inside U.S. borders to work plus
certain Caribbean seasonal workers.
6) Includes the capital consumption adjustment for rental income of persons.
7) Includes the inventory valuation and capital consumption adjustments.
8) "Other" consists of wages and salaries of U.S. residents employed by
international organizations and foreign embassies and consulates in
the U.S.
9) Estimates for 1979 forward reflect Alaska Census Areas as defined in the
1980 Decennial Census: those for prior years reflect Alaska Census Divisions
as defined in the 1970 Decennial Census. Estimates from 1988 forward
separate Aleutian Islands Census Area into Aleutians East Borough and
Aleutians West Census Area. Denali and Lake + Peninsula Boroughs begin in
1991. Estimates from 1993 forward separate Skagway-Yakutat-Angoon Census
Area into Skagway-Hoonah-Angoon Census Area and Yakutat Borough.
10) Cibola, NM was separated from Valencia in June 1981, but in these
estimates, Valencia includes Cibola through the end of 1981.
11) La Paz county, AZ was separated from Yuma county on January 1, 1983.
12) The estimate shown here constitutes the major portion of the true estimate.
13) Not shown to avoid disclosure of confidential information.
14) Less than $50,000. Estimates are included in totals.
15) Data not available for this year.
REGIONAL ECONOMIC INFORMATION SYSTEM
e CA05 June 1996 BUREAU OF ECONOMIC ANALYSIS
<PAGE> 150
C. Full-Time and Part-Time Employees by Major Industry
<PAGE> 151
April 28, 1997
FULL-TIME AND PART-TIME EMPLOYEES BY MAJOR INDUSTRY 1/
For Counties and Metropolitan Areas
(number of jobs)
(36-000) NEW YORK
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Line Item 1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Employment by Place of Work 9,834,410 9,854,973 9,528,942 9,350,729 9,370,929 9,459,572
010 Total full- & part-time employment
By Type:
020 Wage and salary employment 8,703,331 8,667,960 8,327,048 8,174,741 8,185,813 8,256,554
040 Proprietors' employment 1,131,079 1,187,013 1,201,894 1,175,988 1,185,116 1,203,018
060 Farm proprietors' employment 40,689 39,973 39,371 39,440 39,165 38,141
080 Nonfarm proprietors' employment 2/ 1,090,390 1,147,040 1,162,523 1,136,548 1,145,951 1,164,877
By Industry:
070 Farm employment 66,200 66,235 64,546 64,844 66,099 65,650
080 Nonfarm employment 9,768,210 9,788,738 9,464,396 9,285,885 9,304,830 9,393,922
090 Private employment 8,261,415 8,258,048 7,965,857 7,810,352 7,836,333 7,938,486
100 Ag.serv..for..fish.. and other 3/ 49,965 52,555 53,294 51,258 55,182 57,712
1 0 Mining 12,127 11,398 10,751 9,392 9,735 9,500
1 0 Construction 439,638 422,750 375,663 346,614 343,834 352,476
190 Manufacturing 1,222,710 1,164,628 1,091,064 1,044,861 1,012,421 990,132
440 Transportation and public utilities 455,191 478,837 471,916 448,257 453,270 456,677
5 0 Wholesale trade 506,525 496,612 468,985 462,045 451,871 455,684
5 0 Retail trade 1,411,945 1,396,126 1,343,903 1,320,299 1,319,942 1,343,400
5 0 Finance, insurance, and real estate 1,093,587 1,076,458 1,041,623 1,008,082 1,007,851 1,009,314
560 Services 3,069,727 3,158,684 3,108,658 3,119,544 3,182,227 3,263,591
530 Government and government enterprises 1,506,795 1,530,690 1,498,539 1,475,533 1,468,497 1,455,436
640 Federal, civilian 163,430 169,626 158,145 155,914 150,985 149,819
650 Military 91,215 88,151 86,402 85,215 80,067 73,239
660 State and local 1,252,150 1,272,913 1,253,992 1,234,404 1,237,445 1,232,378
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Title CA25 June 1996 BUREAU OF ECONOMIC ANALYSIS
<PAGE> 152
April 28, 1997
FULL-TIME AND PART-TIME EMPLOYEES BY MAJOR INDUSTRY 1/
For Counties and Metropolitan Areas
(number of jobs)
(36-085) RICHMOND NEW YORK
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Line Item 1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Employment by Place of Work 95,070 97,466 96,743 95,836 98,823 101,640
010 Total full- & part-time employment
By Type:
020 Wage and salary employment 77,996 79,640 78,177 77,762 80,610 83,147
040 Proprietors' employment 17,074 17,826 18,566 18,074 18,213 18,493
050 Farm proprietors' employment 0 0 0 0 0 0
060 Nonfarm proprietors' employment 2/ 17,074 17,826 18,566 18,074 18,213 18,493
By Industry:
070 Farm employment 0 0 0 0 0 0
080 Nonfarm employment 95,070 97,466 96,743 95,836 98,823 101,640
090 Private employment 87,483 89,441 88,716 87,500 90,240 93,843
100 Ag.serv..for..fish.. and other 3/ 460 504 509 545 622 687
0 Mining 26 25 26 25 27 26
0 Construction 7,128 6,852 6,351 5,989 5,942 6,258
190 Manufacturing 3,181 3,014 2,688 2,414 2,520 2,575
440 Transportation and public utilities 5,079 5,671 5,689 5,386 5,813 6,382
5 0 Wholesale trade 2,038 2,101 2,268 2,270 2,212 2,264
5 0 Retail trade 20,096 19,784 19,062 18,884 19,116 20,014
5 0 Finance, insurance, and real estate 8,707 8,948 8,782 8,276 8,389 8,437
560 Services 40,768 42,542 43,341 43,711 45,599 47,200
630 Government and government enterprises 7,587 8,025 8,027 8,336 8,583 7,797
640 Federal, civilian 1,049 1,040 1,008 997 960 986
650 Military 1,250 1,354 1,656 2,118 2,511 1,581
660 State and local 5,288 5,631 5,363 5,221 5,112 5,230
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Title CA25 June 1996 BUREAU OF ECONOMIC ANALYSIS
<PAGE> 153
April 28, 1997
FULL-TIME AND PART-TIME EMPLOYEES BY MAJOR INDUSTRY 1/
For Counties and Metropolitan Areas
(number of jobs)
(36-047) KINGS NEW YORK
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Line Item 1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Employment by Place of Work 543,278 546,211 533,853 532,084 541,736 546,038
010 Total full- & part-time employment
By Type:
020 Wage and salary employment 465,554 464,992 450,113 450,444 459,355 462,306
040 Proprietors' employment 77,724 81,219 83,740 81,640 82,381 83,732
050 Farm proprietors' employment 0 0 0 0 0 0
060 Nonfarm proprietors' employment 2/ 77,724 81,219 83,740 81,640 82,381 83,732
By Industry:
070 Farm employment 0 0 0 0 0 0
080 Nonfarm employment 543,278 546,211 533,853 532,084 541,736 546,038
090 Private employment 495,702 498,027 486,458 485,469 495,772 501,085
100 Ag.serv..for..fish.. and other 3/ 1,258 1,361 1,380 1,439 1,555 1,647
130 Mining 115 113 106 80 83 78
180 Construction 28,146 26,922 23,568 22,714 22,244 23,072
190 Manufacturing 74,274 68,623 61,780 59,395 58,824 57,343
440 Transportation and public utilities 28,464 30,296 30,546 29,579 30,943 31,646
510 Wholesale trade 28,847 30,140 29,066 29,266 29,190 30,374
520 Retail trade 79,281 76,745 72,846 70,447 70,005 70,577
530 Finance, insurance, and real estate 42,897 42,203 41,676 42,888 46,122 45,639
560 Services 212,420 221,624 225,490 229,661 236,806 240,709
630 Government and government enterprises 47,576 48,184 47,395 46,615 45,964 44,953
640 Federal, civilian 11,723 11,401 11,159 10,905 10,596 10,479
650 Military 8,817 8,576 8,264 8,478 7,812 6,637
660 State and local 27,036 28,207 27,972 27,232 27,556 27,837
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Title CA25 June 1996 BUREAU OF ECONOMIC ANALYSIS
<PAGE> 154
Footnotes for Table CA25
/ 1969-74 based on 1967 SIC. 1975-87 based on 1972 SIC. 1988-94 based
on 1987 SIC.
2/ Excludes limited partners.
/ "Other" consists of the number of jobs held by U.S. residents employed
by international organizations and foreign embassies and consulates in the
United States.
4/ Cibola, NM was separated from Valencia in June 1981, but in these
estimates Valencia includes Cibola through the end of 1981.
/ La Paz county, AZ was separated from Yuma county on January 1, 1983.
6/ Estimates for 1979 forward reflect Alaska Census Areas as defined in
the 1980 Decennial Census: those for prior years reflect Alaska Census
Divisions as defined in the 1970 Decennial Census. Estimates from 1988
forward separate Aleutian Islands Census Area into Aleutians East Bor. and
Aleutians West Census Area. Denali and Lake + Peninsula Boroughs begin in
1991. Estimates from 1993 forward separate Skagway-Yakutat-Angoon Census
Area into Skagway-Hoonah-Angoon Census Area and Yakutat Borough.
E Estimate shown constitutes the major portion of the true estimate.
)) Not shown to avoid disclosure of confidential information.
(L) Less than 10 jobs. Estimates are included in totals.
|) Data not available for this year.
Table CA25 June 1996 REGIONAL ECONOMIC INFORMATION SYSTEM
BUREAU OF ECONOMIC ANALYSIS
<PAGE> 155
D. Regional Economic Profile
<PAGE> 156
April 28, 1997
REGIONAL ECONOMIC PROFILE
For Counties and Metropolitan Areas
<TABLE>
<CAPTION>
(36-000) NEW YORK
- ------------------------------------------------------------------------------------------------------------------------------------
Line Item 1989 1990 1991 1992 1993 1994
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Place of Residence Profile
010 Total personal income ($000) 377,342,418 401,833,272 413,644,570 436,839,110 451,124,875 467,397,414
020 Nonfarm personal income 376,568,113 401,053,887 412,935,227 436,058,443 450,248,615 466,745,146
030 Farm income 774,305 779,385 709,343 780,667 876,260 652,268
Derivation of Total Personal Income
040 Net earnings 1/ 245,025,180 260,600,738 263,436,690 280,403,865 288,958,055 298,239,033
050 Transfer payments 58,812,473 64,600,722 73,106,506 82,483,653 88,027,609 91,852,352
060 Income maintenance 2/ 6,041,427 6,679,183 7,422,997 8,645,104 9,534,457 10,212,242
070 Unemployment insurance 1,328,530 1,888,795 2,644,900 4,719,218 3,411,049 2,214,822
080 Retirement and other 51,442,516 56,032,744 63,038,609 69,119,331 75,082,103 19,425,288
090 Dividends, interest, and rent 73,504,765 76,631,812 77,101,374 73,951,592 74,139,211 77,306,029
100 Population (thousands) 3/ 17,983.2 18,002.3 18,040.8 18,095.2 18,154.5 18,172.6
Per Capita Incomes ($) 4/
110 Per capita personal income 20,983 22,321 22,928 24,141 24,849 25,720
120 Per capita net earnings 13,625 14,476 14,602 15,496 15,917 16,411
130 Per capita transfer payments 3,270 3,588 4,052 4,558 4,849 5,054
140 Per capita income maintenance 336 371 411 478 525 562
150 Per capita unemployment insurance 74 105 147 261 188 122
160 Per capita retirement & other 2,861 3,113 3,494 3,820 4,136 4,371
170 Per capita dividends, interest, & rent 4,087 4,257 4,274 4,087 4,084 4,254
Place of Work Profile
180 Total earnings (place of work, $000) 278,157,851 295,488,397 299,460,485 319,353,218 328,692,513 339,514,666
190 Wages and salaries 233,175,026 245,454,911 245,008,157 259,282,702 264,104,942 271,101,923
200 Other labor income 19,852,710 21,491,868 23,277,468 25,388,315 27,104,761 28,528,284
210 Proprietors' income 25,130,115 28,541,618 31,174,860 34,682,201 37,482,810 39,884,459
220 Nonfarm proprietors' income 24,637,951 28,091,516 30,790,921 34,223,834 36,959,673 39,574,798
230 Farm proprietors' income 492,164 450,102 383,939 458,367 523,137 309,661
240 Total employment (full & part-time) 9,834,410 9,854,973 9,528,942 9,350,729 9,370,929 9,459,572
250 Wage and salary jobs 8,703,331 8,667,960 8,327,048 8,174,741 8,185,813 8,256,554
260 Number of proprietors 1,131,079 1,187,013 1,201,894 1,175,988 1,185,116 1,203,018
270 Number of nonfarm proprietors /5 1,090,390 1,147,040 1,162,523 1,136,548 1,145,951 1,164,877
280 Number of farm proprietors 40,689 39,973 39,971 39,440 39,165 38,141
290 Average earnings per job ($) 28,284 29,984 31,426 34,153 35,076 35,891
300 Wage & salary earnings per job ($) 26,791 28,317 29,423 31,718 32,264 32,835
310 Average earnings per nonfarm proprietor ($) 22,596 24,490 26,486 30,112 32,252 33,973
</TABLE>
See footnotes at end of table.
Table CA30 June 1996 REGIONAL ECONOMIC INFORMATION SYSTEM
BUREAU OF ECONOMIC ANALYSIS
<PAGE> 157
April 28, 1997
REGIONAL ECONOMIC PROFILE
For Counties and Metropolitan Areas
<TABLE>
<CAPTION>
(36-000) RICHMOND NEW YORK
- -------------------------------------------------------------------------------------------------------------------------------
Line Item 1989 1990 1991 1992 1993 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Place of Residence Profile
010 Total personal income ($000) 7,776,692 8,348,538 8,731,126 9,213,517 9,585,241 9,949,211
020 Nonfarm personal income 7,776,692 8,348,538 8,731,126 9,213,517 9,585,241 9,949,211
030 Farm income 0 0 0 0 0 0
Derivation of Total Personal Income
040 Net earnings 1/ 5,377,601 5,714,488 5,867,671 6,140,852 6,336,787 6,531,120
050 Transfer payments 1,300,117 1,488,554 1,766,031 2,105,007 2,262,616 2,386,284
060 Income maintenance 2/ 128,138 141,340 158,411 244,584 273,887 297,131
070 Unemployment insurance 24,070 45,366 59,982 114,935 86,596 52,835
080 Retirement and other 1,147,909 1,301,848 1,547,638 1,745,488 1,902,133 2,036,318
090 Dividends, interest, and rent 1,098,974 1,145,496 1,097,424 967,658 985,838 1,031,807
100 Population (thousands) 3/ 377.8 380.0 385.4 390.9 395.7 397.7
Per Capita Incomes ($) 4/ 20,548 21,970 22,657 23,571 24,226 25,015
110 Per capita personal income 14,234 15,038 15,227 15,710 16,016 16,421
120 Per capita net earnings 3,441 3,917 4,583 5,385 5,719 6,000
130 Per capita transfer payments 339 372 411 626 692 747
140 Per capita income maintenance 64 119 156 294 219 133
150 Per capita unemployment insurance 3,038 3,426 4,016 4,465 4,808 5,120
160 Per capita retirement & other 2,909 3,014 2,848 2,476 2,492 2,594
170 Per capita dividends, interest, & rent
Place of Work Profile
180 Total earnings (place of work, $000) 2,007,183 2,208,681 2,311,522 2,442,802 2,606,881 2,782,556
190 Wages and salaries 1,623,090 1,750,132 1,789,660 1,878,574 1,981,233 2,108,749
200 Other labor income 129,816 143,693 159,761 175,126 194,386 213,393
210 Proprietors' income 254,277 314,856 362,101 389,102 431,262 460,414
220 Nonfarm proprietors' income 254,277 314,856 362,101 389,102 431,262 460,414
230 Farm proprietors' income 0 0 0 0 0 0
240 Total employment (full & part-time) 95,070 97,466 96,743 95,836 98,823 101,640
250 Wage and salary jobs 77,996 79,640 78,177 77,762 80,610 83,147
260 Number of proprietors 17,074 17,826 18,566 18,074 18,213 18,493
270 Number of nonfarm proprietors /5 17,074 17,826 18,566 18,074 18,213 18,493
280 Number of farm proprietors 0 0 0 0 0 0
290 Average earnings per job ($) 21,113 22,661 23,893 25,489 26,379 27,377
300 Wage & salary earnings per job ($) 20,810 21,976 22,892 24,158 24,578 25,362
310 Average earnings per nonfarm proprietor ($) 14,893 17,663 19,503 21,528 23,679 24,897
</TABLE>
See footnotes at end of table.
Table CA30 June 1996 REGIONAL ECONOMIC INFORMATION SYSTEM
BUREAU OF ECONOMIC ANALYSIS
<PAGE> 158
April 28, 1997
REGIONAL ECONOMIC PROFILE
For Counties and Metropolitan Areas
<TABLE>
<CAPTION>
(36-047) KINGS NEW YORK
- -----------------------------------------------------------------------------------------------------------------------------------
Line Item 1989 1990 1991 1992 1993 1994
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Place of Residence Profile
010 Total personal income ($000) 37,105,853 39,735,054 40,815,759 43,366,542 44,309,232 45,710,625
020 Nonfarm personal income 37,105,853 39,735,054 40,815,759 43,366,542 44,309,232 45,710,625
030 Farm income 0 0 0 0 0 0
Derivation of Total Personal Income
040 Net earnings 1/ 22,588,544 24,143,037 23,887,748 25,905,877 26,374,426 26,959,781
050 Transfer payments 8,690,456 9,634,947 10,970,773 12,252,635 13,136,232 13,736,000
060 Income maintenance 2/ 1,258,120 1,391,561 1,540,527 1,798,126 2,015,988 2,204,245
070 Unemployment insurance 186,473 309,360 379,695 729,167 545,179 337,662
080 Retirement and other 7,245,863 7,934,026 9,050,551 9,725,342 10,575,065 11,194,093
090 Dividends, interest, and rent 5,826,853 5,957,070 5,957,238 5,208,030 4,798,574 5,014,844
100 Population (thousands) 3/ 2,299.5 2,298.3 2,287.8 2,281.4 2,279.5 2,272.0
Per Capita Incomes ($) 4/ 16,137 17,289 17,841 19,008 19,438 20,119
110 Per capita personal income 9,823 10,505 10,441 11,355 11,570 11,866
120 Per capita net earnings 3,779 4,192 4,795 5,371 5,763 6,046
130 Per capita transfer payments 547 605 673 788 884 970
140 Per capita income maintenance 81 135 166 320 239 149
150 Per capita unemployment insurance 3,151 3,452 3,956 4,263 4,639 4,927
160 Per capita retirement & other 2,534 2,592 2,604 2,283 2,105 2,207
170 Per capita dividends, interest, & rent
Place of Work Profile
180 Total earnings (place of work, $000) 11,449,037 12,328,359 12,528,763 13,346,366 13,965,875 14,701,016
190 Wages and salaries 9,717,682 10,332,841 10,429,532 10,994,618 11,410,462 11,966,184
200 Other labor income 807,941 881,770 967,938 1,060,409 1,159,329 1,237,982
210 Proprietors' income 923,414 1,113,748 1,131,293 1,291,339 1,396,084 1,496,850
220 Nonfarm proprietors' income 923,414 1,113,748 1,131,293 1,291,339 1,396,084 1,496,850
230 Farm proprietors' income 0 0 0 0 0 0
240 Total employment (full & part-time) 543,278 546,211 533,853 532,084 541,736 546,038
250 Wage and salary jobs 465,554 464,992 450,113 450,444 459,355 462,306
260 Number of proprietors 77,724 81,219 83,740 81,640 82,381 83,732
270 Number of nonfarm proprietors /5 77,724 81,219 83,740 81,640 82,381 83,732
280 Number of farm proprietors 0 0 0 0 0 0
290 Average earnings per job ($) 21,074 22,571 23,469 25,083 25,780 26,923
300 Wage & salary earnings per job ($) 20,873 22,222 23,171 24,408 24,840 25,884
310 Average earnings per nonfarm proprietor ($) 11,881 13,713 13,510 15,817 16,947 17,877
</TABLE>
See footnotes at end of table. REGIONAL ECONOMIC INFORMATION SYSTEM
Table CA30 June 1996 BUREAU OF ECONOMIC ANALYSIS
<PAGE> 159
Footnotes for Table CA30
/ Total earnings less personal contributions for social insurance adjusted
to place of residence.
2/ Includes supplemental security income payments, payments to families
with dependent children (AFDC), general assistance payments, food stamp
payments, and other assistance payments, including emergency assistance.
/ Census Bureau midyear population estimates. Estimates for 1990-94
reflect county population estimates available as of October 1995.
*/ Type of income dividend by population yields a per capita for that type
of income.
/ Excludes limited partners.
6/ Cibola, NM was separated from Valencia in June 1981, but in these
estimates Valencia includes Cibola through the end of 1981.
/ La Paz county, AZ was separated from Yuma county on January 1, 1983.
8/ Estimates for 1979 forward reflect Alaska Census Areas as defined in
the 1980 Decennial Census: those for prior years reflect Alaska Census
Divisions as defined in the 1970 Decennial Census. Estimates from 1988
forward separate Aleutian Islands Census Area Into Aleutians East Bor, and
Aleutians West Census Area. Denali and Lake + Peninsula Boroughs begin in
1991. Estimates from 1993 forward separate Skagway-Yakutat-Angoon Census
Area into Skagway-Hoonah-Angoon Census Area and Yakutat Borough.
(L) Less than $50,000 or less than 10 jobs, as appropriate. Estimates are
included in totals.
|) Data not available for this year.
Table CA30 June 1996 REGIONAL ECONOMIC INFORMATION SYSTEM
BUREAU OF ECONOMIC ANALYSIS
<PAGE> 160
EXHIBIT III-1
General Characteristics of Publicly-Traded Institutions
<PAGE> 161
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
California Companies
- --------------------
AHM Ahmanson and Co. H.F. of CA NYSE Nationwide M.B. 48,697 345 12-31 10/72 50.37 4,903
GDW Golden West Fin. Corp. of CA NYSE Nationwide M.B. 38,530 232 12-31 05/59 76.00 4,312
GLN Glendale Fed. Bk, FSB of CA NYSE CA Div. 15,394 150 06-30 10/83 26.87 1,352
CSA Coast Savings Financial of CA NYSE California R.E. 8,797 89 12-31 12/85 46.56 866
DSL Downey Financial Corp. of CA NYSE Southern CA Thrift 5,485 52 12-31 01/71 21.50 575
FED FirstFed Fin. Corp. of CA NYSE Los Angeles CA R.E. 4,130 25 12-31 12/83 34.06 360
WES Westcorp Inc. of Orange CA NYSE California Div. 3,406 25 12-31 05/86 19.12 501
BPLS Bank Plus Corp. of CA OTC Los Angeles CA R.E. 3,295 33 12-31 / 11.75 214
BVCC Bay View Capital Corp. of CA OTC San Francisco CA M.B. 3,045 27 12-31 05/86 26.06 338
PFFB PFF Bancorp of Pomona CA OTC Southern CA Thrift 2,536 22 03-31 03/96 18.50 349
CENF CENFED Financial Corp. of CA OTC Los Angeles CA Thrift 2,263 18 12-31 10/91 34.44 198
FRC First Republic Bancorp of CA (3) NYSE CA,NV M.B. 2,183 11 12-31 / 24.50 237
AFFFZ America First Fin. Fund of CA OTC San Francisco CA Div. 2,183 36 12-31 / 39.37 237
REDF RedFed Bancorp of Redlands CA OTC Southern CA Thrift 909 14 12-31 04/94 16.75 120
HTHR Hawthorne Fin. Corp. of CA OTC Southern CA Thrift 838 9 12-31 / 13.00 34
HEMT HF Bancorp of Hemet CA OTC Southern CA Thrift 827 J 12 06-30 06/95 14.00 88
ITLA Imperial Thrift & Loan of CA (3) OTC Los Angeles CA R.E. 810 11 12-31 / 17.50 137
QCBC Quaker City Bancorp of CA OTC Los Angeles CA R.E. 781 8 06-30 12/93 19.00 91
PROV Provident Fin. Holdings of CA OTC M.B. 609 0 06-30 06/96 18.62 94
HBNK Highland Federal Bank of CA OTC Los Angeles CA R.E. 480 11 12-31 / 25.00 58
MBBC Monterey Bay Bancorp of CA OTC West Central CA Thrift 422 6 12-31 02/95 16.12 52
SGVB SGV Bancorp of W. Covina CA OTC Los Angeles CA Thrift 400 6 06-30 06/95 15.00 35
PCCI Pacific Crest Capital of CA (3) OTC Southern CA R.E. 343 4 12-31 / 14.37 42
BYFC Broadway Fin. Corp. of CA OTC Los Angeles CA Thrift 117 D 3 12-31 01/96 10.75 10
Florida Companies
- -----------------
BANC BankAtlantic Bancorp of FL OTC Southeastern FL M.B. 2,773 43 12-31 11/83 14.50 261
OCWN Ocwen Financial Corp. of FL OTC Southeast FL Div. 2,649 1 12-31 / 35.00 938
FFPB First Palm Beach Bancorp of FL OTC Southeast FL Thrift 1,558 31 09-30 09/93 31.25 157
</TABLE>
<PAGE> 162
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Florida Companies (continued)
- -----------------------------
BKUNA BankUnited SA of FL OTC Miami FL Thrift 1,453 7 09-30 12/85 9.81 87
HARB Harbor FSB, MHC of FL (46.0) OTC Eastern FL Thrift 1,105 22 09-30 01/94 43.50 216
FFFL Fidelity FSB, MHC of FL (47.4) OTC Southeast FL Thrift 927 20 12-31 01/94 21.50 145
CMSV Commty. Svgs, MHC of FL (48.5) OTC Southeast FL Thrift 682 17 09-30 10/94 22.87 113
FFLC FFLC Bancorp of Leesburg FL OTC Central FL Thrift 359 8 12-31 01/94 27.25 63
FFFG F.F.O. Financial Group of FL OTC Central FL R.E. 317 D 11 12-31 10/88 4.75 40
Mid-Atlantic Companies
- ----------------------
DME Dime Bancorp, Inc. of NY (3) NYSE NY,NJ,FL M.B. 18,465 87 12-31 08/86 17.94 1,861
GPT GreenPoint Fin. Corp. of NY (3) NYSE New York City NY Thrift 13,261 82 06-30 01/94 63.25 2,849
SVRN Sovereign Bancorp of PA OTC PA,NJ,DE M.B. 10,287 120 12-31 08/86 15.94 1,116
ASFC Astoria Financial Corp. of NY OTC New York City NY Thrift 7,689 46 12-31 11/93 46.88 983
LISB Long Island Bancorp, Inc of NY OTC Long Island NY M.B. 5,814 36 09-30 04/94 35.19 853
COFD Collective Bancorp Inc. of NJ OTC Southern NJ Thrift 5,518 79 06-30 02/84 47.19 967
RCSB RCSB Financial, Inc. of NY (3) OTC NY M.B. 4,032 34 11-30 04/86 48.50 708
ALBK ALBANK Fin. Corp. of Albany NY OTC Upstate NY, MA Thrift 3,496 71 06-30 04/92 38.62 495
ROSE T R Financial Corp. of NY (3) OTC New York City NY Thrift 3,404 15 12-31 06/93 23.87 421
NYB New York Bancorp, Inc. of NY AMEX Southeastern NY Thrift 3,175 29 09-30 01/88 39.56 641
RSLN Roslyn Bancorp, Inc. of NY (3) OTC Long Island NY M.B. 2,849 6 12-31 01/97 22.19 968
GRTR The Greater New York SB of NY (3) OTC New York NY Div. 2,571 14 12-31 06/87 21.75 297
BKCO Bankers Corp. of NJ (3) OTC Central NJ Thrift 2,542 15 12-31 03/90 29.00 359
CMSB Cmnwealth Bancorp of PA OTC Philadelphia PA M.B. 2,236 39 06-30 06/96 16.12 276
NWSB Northwest SB, MHC of PA (29.9) OTC Pennsylvania Thrift 1,997 53 06-30 11/94 16.25 380
HARS Harris SB, MHC of PA (24.2) OTC Southeast PA Thrift 1,943 31 12-31 01/94 23.50 264
RELY Reliance Bancorp, Inc. of NY OTC New York City NY Thrift 1,927 28 06-30 03/94 28.75 254
MLBC ML Bancorp of Villanova PA OTC Philadelphia PA M.B. 1,875 D 18 03-31 08/94 19.25 200
HAVN Haven Bancorp of Woodhaven NY OTC New York City NY Thrift 1,728 20 12-31 09/93 37.25 161
JSBF JSB Financial, Inc. of NY OTC New York City NY Thrift 1,531 13 12-31 06/90 44.00 433
WSFS WSFS Financial Corp. of DE (3) OTC DE Div. 1,478 14 12-31 11/86 14.50 182
OCFC Ocean Fin. Corp. of NJ OTC Eastern NJ Thrift 1,388 10 12-31 07/96 34.75 315
QCSB Queens County Bancorp of NY (3) OTC New York City NY Thrift 1,373 13 12-31 11/93 48.75 543
</TABLE>
<PAGE> 163
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
- ----------------------------------
PFSB PennFed Fin. Services of NJ OTC Northern NJ Thrift 1,252 17 06-30 07/94 27.25 131
DIME Dime Community Bancorp of NY OTC New York City NY Thrift 1,237 15 06-30 06/96 19.25 253
YFED York Financial Corp. of PA OTC PA,MD Thrift 1,157 22 06-30 02/84 21.50 150
MFSL Maryland Fed. Bancorp of MD OTC MD Thrift 1,128 25 02-28 06/87 44.50 143
FSLA First SB SLA MHC of NJ (47.5) OTC Eastern NJ Thrift 1,025 17 12-31 06/92 27.50 199
PVSA Parkvale Financial Corp of PA OTC Southwestern PA Thrift 973 28 06-30 07/87 28.50 116
PSBK Progressive Bank, Inc. of NY (3) OTC Southeast NY Thrift 878 17 12-31 08/84 29.75 114
PKPS Poughkeepsie Fin. Corp. of NY OTC Southeast NY Thrift 861 13 12-31 11/85 8.13 102
FFIC Flushing Fin. Corp. of NY (3) OTC New York City NY Thrift 811 7 12-31 11/95 20.25 164
MBB MSB Bancorp of Middletown NY (3) OTC Southeastern NY Thrift 811 17 09-30 08/92 22.25 63
IBSF IBS Financial Corp. of NJ OTC Southwest NJ Thrift 740 10 09-30 10/94 18.25 201
FBBC First Bell Bancorp of PA OTC Pittsburgh PA Thrift 709 7 12-31 06/95 16.75 114
PWBC PennFirst Bancorp of PA OTC Western PA Thrift 706 9 12-31 06/90 18.00 70
FCIT First Cit. Fin. Corp of MD OTC DC Metro Area Thrift 694 14 12-31 12/86 33.12 98
SFIN Statewide Fin. Corp. of NJ OTC Northern NJ Thrift 677 16 03-31 10/95 18.37 88
GAF GA Financial Corp. of PA AMEX Pittsburgh PA Thrift 670 13 12-31 03/96 18.19 153
THRD TF Financial Corp. of PA OTC Philadelphia PA Thrift 644 14 06-30 07/94 20.00 82
TSBS Trenton SB, FSB MHC of NJ(35.0 OTC Central NJ Thrift 626 10 12-31 08/95 20.25 183
PBIX Patriot Bank Corp. of PA OTC Southeast PA Thrift 594 7 12-31 12/95 17.75 76
FSNJ First SB of NJ, MHC (45.9) OTC Northern NJ Thrift 579 D 4 05-31 01/95 33.50 103
FMCO FMS Financial Corp. of NJ OTC Southern NJ Thrift 554 18 12-31 12/88 28.50 68
PULS Pulse Bancorp of S. River NJ OTC Central NJ Thrift 516 4 09-30 09/86 20.37 62
FSPG First Home Bancorp of NJ OTC NJ,DE Thrift 508 10 12-31 04/87 20.12 54
ANBK American Nat'l Bancorp of MD OTC Baltimore MD R.E. 487 S 9 07-31 11/95 19.31 70
LVSB Lakeview SB of Paterson NJ OTC Northern NJ Thrift 482 8 07-31 12/93 33.50 77
AHCI Ambanc Holding Co., Inc. of NY (3) OTC East-Central NY Thrift 478 9 12-31 12/95 16.00 70
CNY Carver Bancorp, Inc. of NY OTC New York, NY Thrift 424 8 03-31 10/94 12.25 28
SHEN First Shenango Bancorp of PA OTC Western PA Thrift 401 4 12-31 04/93 27.75 57
PFNC Progress Financial Corp. of PA OTC Southeastern PA M.B. 400 9 12-31 07/83 10.75 41
RARB Raritan Bancorp. of Raritan NJ (3) OTC Central NJ Thrift 375 5 12-31 03/87 23.00 53
PBCI Pamrapo Bancorp, Inc. of NJ OTC Northern NJ Thrift 367 8 12-31 10/89 20.75 59
FOBC Fed One Bancorp of Wheeling WV OTC Northern WV,OH Thrift 346 9 12-31 01/95 21.25 50
HARL Harleysville SA of PA OTC Southeastern PA Thrift 333 4 09-30 08/87 24.50 40
</TABLE>
<PAGE> 164
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-Atlantic Companies (continued)
- ----------------------------------
FSBI Fidelity Bancorp, Inc. of PA OTC Southwestern PA Thrift 328 8 09-30 06/88 20.00 31
FKFS First Keystone Fin. Corp of PA OTC Philadelphia PA Thrift 315 5 09-30 01/95 24.00 29
CVAL Chester Valley Bancorp of PA OTC Southeastern PA Thrift 305 6 06-30 03/87 20.62 42
LFBI Little Falls Bancorp of NJ OTC New Jersey Thrift 303 7 12-31 01/96 16.50 45
EQSB Equitable FSB of Wheaton MD OTC Central MD Thrift 296 4 09-30 09/93 38.50 23
YFCB Yonkers Fin. Corp. of NY OTC Yonkers NY Thrift 284 4 09-30 04/96 16.62 53
LFED Leeds FSB, MHC of MD (36.2) OTC Baltimore MD Thrift 282 1 06-30 03/94 20.25 70
WVFC WVS Financial Corp. of PA (3) OTC Pittsburgh PA Thrift 280 5 06-30 11/93 26.75 46
CATB Catskill Fin. Corp. of NY (3) OTC Albany NY Thrift 274 3 09-30 04/96 16.00 80
FIBC Financial Bancorp, Inc. of NY OTC New York, NY Thrift 269 5 09-30 08/94 18.75 33
IFSB Independence FSB of DC OTC Washington DC Ret. 263 2 12-31 06/85 12.37 16
WSB Washington SB, FSB of MD AMEX Southeastern MD Thrift 258 3 07-31 / 6.25 27
FBER First Bergen Bancorp of NJ OTC Northern NJ Thrift 252 2 09-30 04/96 16.00 48
WYNE Wayne Bancorp of NJ OTC Thrift 245 0 12-31 06/96 19.75 43
GDVS Greater DV SB,MHC of PA (19.9) (3) OTC Southeast PA Thrift 239 7 12-31 03/95 16.00 52
PHFC Pittsburgh Home Fin. of PA OTC Pittsburgh PA Thrift 237 6 09-30 04/96 15.75 31
PHSB Peoples Home SB of PA OTC Western PA Thrift 229 P 9 12-31 07/97 13.75 38
ESBK The Elmira SB FSB of Elmira NY (3) OTC NY,PA Ret. 223 6 12-31 03/85 22.50 16
HRBF Harbor Federal Bancorp of MD OTC Baltimore MD Thrift 219 6 03-31 08/94 19.00 33
SBFL SB Fngr Lakes MHC of NY (33.1) OTC Western NY Thrift 213 4 04-30 11/94 17.75 32
LARL Laurel Capital Group of PA OTC Southwestern PA Thrift 209 6 06-30 02/87 21.12 32
PEEK Peekskill Fin. Corp. of NY OTC Southeast NY Thrift 183 3 06-30 12/95 15.37 49
PLSK Pulaski SB, MHC of NJ (46.0) OTC New Jersey Thrift 169 P 5 12-31 04/97 13.37 28
SFED SFS Bancorp of Schenectady NY OTC Eastern NY Thrift 169 3 12-31 06/95 18.25 23
SKBO First Carnegie,MHC of PA(45.0) OTC Western PA Thrift 150 P 3 03-31 04/97 14.00 32
PRBC Prestige Bancorp of PA OTC Thrift 127 0 12-31 06/96 15.63 14
TPNZ Tappan Zee Fin., Inc. of NY OTC Southeast NY Thrift 120 S 1 03-31 10/95 16.62 25
GOSB GSB Financial Corp. of NY OTC Southeast NY Thrift 114 P 2 09-30 07/97 14.75 33
WWFC Westwood Fin. Corp. of NJ OTC Northern NJ Thrift 108 2 03-31 06/96 21.25 14
AFBC Advance Fin. Bancorp of WV OTC Northern Neck WV Thrift 104 2 06-30 01/97 16.00 17
WHGB WHG Bancshares of MD OTC Baltimore MD Thrift 98 5 09-30 04/96 15.00 23
ALBC Albion Banc Corp. of Albion NY OTC Western NY Thrift 66 2 09-30 07/93 24.00 6
PWBK Pennwood SB of PA (3) OTC Pittsburgh PA Thrift 48 3 12-31 07/96 14.75 9
</TABLE>
<PAGE> 165
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
COFI Charter One Financial of OH OTC OH,MI Div. 14,041 155 12-31 01/88 54.62 2,523
CFB Commercial Federal Corp. of NE NYSE NE,CO,KS,OK M.B. 6,902 98 06-30 12/84 39.00 839
FFHC First Financial Corp. of WI OTC WI,IL Div. 5,809 129 12-31 12/80 29.50 1,068
SPBC St. Paul Bancorp, Inc. of IL OTC Chicago IL Div. 4,485 52 12-31 05/87 23.12 786
SECP Security Capital Corp. of WI OTC Wisconsin Div. 3,647 42 06-30 01/94 95.69 881
MAFB MAF Bancorp of IL OTC Chicago IL Thrift 3,236 13 06-30 01/90 31.62 495
GTFN Great Financial Corp. of KY OTC Kentucky M.B. 3,002 41 12-31 03/94 34.09 480
CTZN CitFed Bancorp of Dayton OH OTC Dayton OH M.B. 2,937 33 03-31 01/92 41.12 354
STND Standard Fin. of Chicago IL OTC Chicago IL Thrift 2,489 13 12-31 08/94 24.94 404
ABCW Anchor Bancorp Wisconsin of WI OTC Wisconsin M.B. 1,885 33 03-31 07/92 50.50 231
STFR St. Francis Cap. Corp. of WI OTC Milwaukee WI Thrift 1,579 13 09-30 06/93 36.00 194
FTFC First Fed. Capital Corp. of WI OTC Southern WI M.B. 1,530 44 12-31 11/89 23.06 211
DNFC D&N Financial Corp. of MI OTC MI,WI Ret. 1,528 35 12-31 02/85 19.25 158
FISB First Indiana Corp. of IN OTC Central IN M.B. 1,481 28 12-31 08/83 22.50 236
ABCL Allied Bancorp of IL OTC Chicago IL M.B. 1,313 10 09-30 07/92 30.00 160
JSBA Jefferson Svgs Bancorp of MO OTC St. Louis MO,TX Thrift 1,148 D 21 12-31 04/93 29.00 144
FFSW First Fed Fin. Serv. of OH OTC Northeastern OH Thrift 1,088 18 12-31 04/87 41.00 188
AADV Advantage Bancorp of WI OTC WI,IL Thrift 1,021 15 09-30 03/92 39.50 128
OFCP Ottawa Financial Corp. of MI OTC Western MI Thrift 859 26 12-31 08/94 24.62 124
CFSB CFSB Bancorp of Lansing MI OTC Central MI Thrift 834 18 12-31 06/90 26.37 136
IFSL Indiana Federal Corp. of IN OTC Northwestern IN Thrift 819 15 12-31 02/87 29.25 140
NASB North American SB of MO OTC KS,MO M.B. 689 8 09-30 09/85 53.00 120
GSBC Great Southern Bancorp of MO OTC Southwest MO Div. 679 25 06-30 12/89 16.87 140
HOMF Home Fed Bancorp of Seymour IN OTC Southern IN Thrift 664 15 06-30 01/88 29.50 100
MSBK Mutual SB, FSB of Bay City MI OTC Michigan M.B. 663 22 12-31 07/92 10.37 44
AVND Avondale Fin. Corp. of IL OTC Chicago IL Ret. 635 6 03-31 04/95 13.75 48
SFSL Security First Corp. of OH OTC Northeastern OH R.E. 635 13 03-31 01/88 23.75 119
FNGB First Northern Cap. Corp of WI OTC Northeast WI Thrift 618 20 12-31 12/83 25.00 110
FFYF FFY Financial Corp. of OH OTC Youngstown OH Thrift 599 10 06-30 06/93 25.87 112
EMLD Emerald Financial Corp of OH OTC Cleveland OH Thrift 589 13 12-31 / 14.37 73
HFFC HF Financial Corp. of SD OTC South Dakota Thrift 561 19 06-30 04/92 21.50 64
HMNF HMN Financial, Inc. of MN OTC Southeast MN Thrift 553 7 12-31 06/94 23.12 97
COVB CoVest Bancshares of IL OTC Chicago IL Thrift 553 3 12-31 07/92 21.81 66
FDEF First Defiance Fin.Corp. of OH OTC Northwest OH Thrift 546 9 06-30 10/95 14.87 140
FFBH First Fed. Bancshares of AR OTC Northern AR Thrift 520 8 12-31 05/96 21.25 104
</TABLE>
<PAGE> 166
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
FFOH Fidelity Financial of OH OTC Cincinnati OH Thrift 513 4 12-31 03/96 15.00 84
CBCI Calumet Bancorp of Chicago IL OTC Chicago IL Thrift 495 5 06-30 02/92 38.12 85
FBCI Fidelity Bancorp of Chicago IL OTC Chicago IL Thrift 486 5 09-30 12/93 20.12 56
CAFI Camco Fin. Corp. of OH OTC Eastern OH M.B. 472 7 12-31 / 18.37 59
FFSX First FS&LA. MHC of IA (46.0) OTC Western IA Thrift 463 12 06-30 06/92 22.50 64
FMBD First Mutual Bancorp of IL OTC Central IL Thrift 425 7 12-31 07/95 15.63 58
PERM Permanent Bancorp of IN OTC Southwest IN Thrift 413 D 11 03-31 04/94 25.25 52
HALL Hallmark Capital Corp. of WI OTC Milwaukee WI Thrift 409 3 06-30 01/94 22.50 32
SFSB SuburbFed Fin. Corp. of IL OTC IL,IN Thrift 408 12 12-31 02/92 26.75 34
ASBI Ameriana Bancorp of IN OTC Eastern IN,OH Thrift 402 8 12-31 02/87 18.50 60
WOFC Western Ohio Fin. Corp. of OH OTC Western OH Thrift 400 6 12-31 07/94 22.00 51
PMFI Perpetual Midwest Fin. of IA OTC EastCentral IA Thrift 398 4 12-31 03/94 20.50 39
CBSB Charter Financial Inc. of IL OTC Southern IL Thrift 395 6 09-30 12/95 18.25 77
PFSL Pocahnts Fed, MHC of AR (46.4) OTC Northeast AR Thrift 373 5 09-30 04/94 22.50 37
FFKY First Fed. Fin. Corp. of KY OTC Central KY Thrift 372 7 06-30 07/87 21.50 90
SWBI Southwest Bancshares of IL OTC Chicago IL Thrift 372 5 12-31 06/92 21.12 56
MCBS Mid Continent Bancshares of KS OTC Central KS M.B. 371 7 09-30 06/94 30.87 60
CASH First Midwest Fin. Corp. of IA OTC IA,SD R.E. 370 9 09-30 09/93 16.25 46
FFHH FSF Financial Corp. of MN OTC Southern MN Thrift 367 11 09-30 10/94 17.62 55
HBEI Home Bancorp of Elgin IL OTC Northern IL Thrift 359 5 12-31 09/96 18.25 128
PVFC PVF Capital Corp. of OH OTC Cleveland OH R.E. 356 9 06-30 12/92 19.75 46
KNK Kankakee Bancorp of IL AMEX Illinois Thrift 342 10 03-31 12/92 30.75 44
HVFD Haverfield Corp. of OH OTC Cleveland OH Thrift 342 10 12-31 03/85 26.00 50
HMCI Homecorp, Inc. of Rockford IL OTC Northern IL Thrift 336 9 12-31 06/90 14.00 24
INBI Industrial Bancorp of OH OTC Northern OH Thrift 334 10 12-31 08/95 13.75 74
HBFW Home Bancorp of Fort Wayne IN OTC Northeast IN Thrift 328 8 09-30 03/95 20.87 55
WCBI WestCo Bancorp of IL OTC Chicago IL Thrift 310 1 12-31 06/92 26.00 64
SMFC Sho-Me Fin. Corp. of MO OTC Southwest MO Thrift 304 7 12-31 06/94 37.62 57
WFCO Winton Financial Corp. of OH OTC Cincinnati OH R.E. 292 S 4 09-30 08/88 15.00 30
PFDC Peoples Bancorp of Auburn IN OTC Northeastern IN Thrift 283 6 09-30 07/87 23.00 52
GFCO Glenway Financial Corp. of OH OTC Cincinnati OH Thrift 281 6 06-30 11/90 26.00 30
FBCV 1st Bancorp of Vincennes IN OTC Southwestern IN M.B. 273 1 06-30 04/87 30.25 21
CBK Citizens First Fin.Corp. of IL AMEX Central IL Thrift 272 6 12-31 05/96 16.12 45
</TABLE>
<PAGE> 167
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
FCBF FCB Fin. Corp. of Neenah WI OTC Eastern WI Thrift 271 6 03-31 09/93 27.00 67
FFED Fidelity Fed. Bancorp of IN OTC Southwestern IN Thrift 250 4 06-30 08/87 8.75 22
WAYN Wayne S&L Co. MHC of OH (47.8) OTC Central OH Thrift 250 D 6 03-31 06/93 18.00 40
EFBI Enterprise Fed. Bancorp of OH OTC Cincinnati OH Thrift 246 D 5 09-30 10/94 18.25 37
CAPS Capital Savings Bancorp of MO OTC Central MO Thrift 238 7 06-30 12/93 17.00 32
MFBC MFB Corp. of Mishawaka IN OTC Northern IN Thrift 234 4 09-30 03/94 19.62 34
OHSL OHSL Financial Corp. of OH OTC Cincinnati, OH Thrift 230 4 12-31 02/93 23.75 29
DFIN Damen Fin. Corp. of Chicago IL OTC Chicago IL Thrift 227 3 11-30 10/95 14.13 46
CBCO CB Bancorp of Michigan City IN OTC Northwest IN Thrift 227 D 3 03-31 12/92 34.25 40
FFHS First Franklin Corp. of OH OTC Cincinnati OH Thrift 226 7 12-31 01/88 20.00 24
LARK Landmark Bancshares of KS OTC Central KS Thrift 224 5 09-30 03/94 20.50 37
SBCN Suburban Bancorp. of OH OTC Cincinnati OH Thrift 222 8 06-30 09/93 22.00 32
BFFC Big Foot Fin. Corp. of IL OTC Chicago IL Thrift 212 3 07-31 12/96 17.00 43
MBLF MBLA Financial Corp. of MO OTC Northeast MO Thrift 210 2 06-30 06/93 23.50 31
FFFD North Central Bancshares of IA OTC Central IA Thrift 204 4 12-31 03/96 16.44 56
WEFC Wells Fin. Corp. of Wells MN OTC Southcentral MN Thrift 202 7 12-31 04/95 15.75 32
MWFD Midwest Fed. Fin. Corp of WI OTC Central WI Thrift 201 9 12-31 07/92 19.75 32
HCBB HCB Bancshares of AR OTC Southern AR Thrift 199 P 5 06-30 05/97 13.87 37
CMRN Cameron Fin. Corp. of MO OTC Northwest MO Thrift 198 3 09-30 04/95 17.37 47
GFED Guarnty FS&LA,MHC of MO (31.0) OTC Southwest MO Thrift 196 4 06-30 04/95 18.00 56
FFBZ First Federal Bancorp of OH OTC Eastern OH Thrift 192 6 09-30 06/92 18.50 29
LSBI LSB Fin. Corp. of Lafayette IN OTC Central IN Thrift 188 3 12-31 02/95 21.00 20
PULB Pulaski SB, MHC of MO (29.0) OTC St. Louis MO Thrift 179 S 5 09-30 05/94 19.87 42
MFFC Milton Fed. Fin. Corp. of OH OTC Southwest OH Thrift 179 2 09-30 10/94 13.75 32
PFED Park Bancorp of Chicago IL OTC Chicago IL Thrift 178 3 12-31 08/96 16.62 40
MARN Marion Capital Holdings of IN OTC Central IN Thrift 174 2 06-30 03/93 23.44 43
NEIB Northeast Indiana Bncrp of IN OTC Northeast IN Thrift 173 3 12-31 06/95 16.50 29
EGLB Eagle BancGroup of IL OTC Central IL Thrift 171 1 12-31 07/96 16.62 21
SMBC Southern Missouri Bncrp of MO OTC Southeast MO Thrift 166 8 06-30 04/94 17.50 29
HMLK Hemlock Fed. Fin. Corp. of IL OTC Chicago IL Thrift 165 3 12-31 04/97 15.25 32
JXSB Jcksnville SB,MHC of IL (44.6) OTC Central IL Thrift 164 4 12-31 04/95 16.75 21
FFWD Wood Bancorp of OH OTC Northern OH Thrift 163 6 06-30 08/93 22.00 33
FBSI First Bancshares of MO OTC Southcentral MO Thrift 160 5 06-30 12/93 23.50 27
</TABLE>
<PAGE> 168
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
FFWC FFW Corporation of Wabash IN OTC Central IN Thrift 158 3 06-30 03/93 28.25 20
QCFB QCF Bancorp of Virginia MN OTC Northeast MN Thrift 148 S 2 06-30 04/95 24.50 35
BWFC Bank West Fin. Corp. of MI OTC Southeast MI Thrift 147 2 06-30 03/95 13.50 24
CNBA Chester Bancorp of IL OTC Southern IL Ret. 142 6 Dec 10/96 15.00 33
MWBI Midwest Bancshares, Inc. of IA OTC Southeast IA Thrift 139 4 12-31 11/92 34.50 12
RIVR River Valley Bancorp of IN OTC Southeast IN Thrift 138 7 12-31 12/96 15.50 18
GTPS Great American Bancorp of IL OTC East Central IL Thrift 138 3 09-30 06/95 16.87 30
CLAS Classic Bancshares of KY OTC Eastern KY Thrift 132 1 03-31 12/95 14.25 19
WEHO Westwood Hmstd Fin Corp of OH OTC Cincinnati OH Thrift 130 2 12-31 09/96 14.75 42
FKKY Frankfort First Bancorp of KY OTC Frankfort KY Thrift 128 3 06-30 07/95 9.00 30
MFCX Marshalltown Fin. Corp. of IA OTC Central IA Thrift 127 3 09-30 03/94 16.87 24
MIFC Mid Iowa Financial Corp. of IA OTC Central IA Thrift 124 6 09-30 10/92 8.50 14
NBSI North Bancshares of Chicago IL OTC Chicago IL Thrift 120 2 06-30 12/93 20.50 20
PTRS Potters Financial Corp of OH OTC Northeast OH Thrift 117 4 12-31 12/93 22.00 11
ASBP ASB Financial Corp. of OH OTC Southern OH Thrift 109 1 06-30 04/95 12.12 21
FFSL First Independence Corp. of KS OTC Southeast KS Thrift 109 1 09-30 10/93 11.62 12
HFFB Harrodsburg 1st Fin Bcrp of KY OTC Central KY Thrift 108 2 09-30 10/95 15.50 31
PSFC Peoples Sidney Fin. Corp of OH OTC WestCentral OH Thrift 108 P 2 06-30 04/97 14.87 27
BDJI First Fed. Bancorp. of MN OTC Northern MN Thrift 108 5 09-30 04/95 20.75 15
DCBI Delphos Citizens Bancorp of OH OTC Northwest OH Thrift 107 1 09-30 11/96 16.37 33
MONT Montgomery Financial Corp ofIN OTC Westcentral IN Thrift 104 P 4 06-30 07/97 11.37 19
HFSA Hardin Bancorp of Hardin MO OTC Western MO Thrift 103 3 03-31 09/95 16.25 14
FTNB Fulton Bancorp of MO OTC Central MO Thrift 99 2 04-30 10/96 19.87 34
CNSB CNS Bancorp of MO OTC Central MO Thrift 98 5 12-31 06/96 16.87 28
CIBI Community Inv. Bancorp of OH OTC NorthCentral OH Thrift 97 3 06-30 02/95 13.25 13
CBES CBES Bancorp of MO OTC Western MO Thrift 95 2 06-30 09/96 17.50 18
NWEQ Northwest Equity Corp. of WI OTC Northwest WI Thrift 95 3 03-31 10/94 14.75 12
FTSB Fort Thomas Fin. Corp. of KY OTC Northern KY Thrift 95 2 09-30 06/95 11.00 16
AMFC AMB Financial Corp. of IN OTC Northwest IN Thrift 94 4 12-31 04/96 14.75 16
WCFB Wbstr Cty FSB MHC of IA (45.2) OTC Central IA Thrift 93 1 12-31 08/94 16.25 34
FFBI First Financial Bancorp of IL OTC Northern IL M.B. 93 2 12-31 10/93 18.37 8
INCB Indiana Comm. Bank, SB of IN OTC Central IN Ret. 91 3 06-30 12/94 16.25 15
THR Three Rivers Fin. Corp. of MI AMEX Southwest MI Thrift 91 4 06-30 08/95 16.50 14
</TABLE>
<PAGE> 169
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Mid-West Companies (continued)
- ------------------------------
PFFC Peoples Fin. Corp. of OH OTC Northeast OH Thrift 90 2 09-30 09/96 16.25 24
KYF Kentucky First Bancorp of KY AMEX Central KY Thrift 89 2 06-30 08/95 11.87 16
GFSB GFS Bancorp of Grinnell IA OTC Central IA Thrift 88 1 06-30 01/94 13.37 13
FFDF FFD Financial Corp. of OH OTC Northeast OH Thrift 85 1 06-30 04/96 14.75 21
SFFC StateFed Financial Corp. of IA OTC Des Moines IA Thrift 85 2 06-30 01/94 19.25 15
HHFC Harvest Home Fin. Corp. of OH OTC Southwest OH Thrift 84 D 3 09-30 10/94 11.75 11
PCBC Perry Co. Fin. Corp. of MO OTC EastCentral MO Thrift 80 D 1 09-30 02/95 22.25 18
LOGN Logansport Fin. Corp. of IN OTC Northern IN Thrift 79 1 12-31 06/95 13.62 17
SOBI Sobieski Bancorp of S. Bend IN OTC Northern IN Thrift 79 3 06-30 03/95 16.25 12
HZFS Horizon Fin'l. Services of IA OTC Central IA Thrift 78 3 06-30 06/94 19.00 8
MSBF MSB Financial Corp. of MI OTC Southcentral MI Thrift 76 2 06-30 02/95 29.50 19
PSFI PS Financial of Chicago IL OTC Chicago IL Thrift 75 1 12-31 11/96 14.62 32
ATSB AmTrust Capital Corp. of IN OTC Northcentral IN Thrift 71 3 06-30 03/95 12.50 7
MIVI Miss. View Hold. Co. of MN OTC Central MN Thrift 70 1 09-30 03/95 15.25 12
HCFC Home City Fin. Corp. of OH OTC Southwest OH Thrift 68 1 06-30 12/96 14.75 14
GWBC Gateway Bancorp of KY OTC Eastern KY Thrift 66 2 06-30 01/95 17.87 19
CKFB CKF Bancorp of Danville KY OTC Central KY Thrift 60 1 12-31 01/95 19.25 18
LXMO Lexington B&L Fin. Corp. of MO OTC West Central MO Thrift 60 1 09-30 06/96 15.75 17
NSLB NS&L Bancorp of Neosho MO OTC Southwest MO Thrift 58 2 09-30 06/95 16.62 12
MRKF Market Fin. Corp. of OH OTC Cincinnati OH Thrift 57 P 2 09-30 03/97 14.25 19
CSBF CSB Financial Group Inc of IL (3) OTC Centralia IL Thrift 50 S 1 09-30 10/95 12.25 12
RELI Reliance Bancshares Inc of WI (3) OTC Milwaukee WI Thrift 48 S 1 June 04/96 8.13 21
HBBI Home Building Bancorp of IN OTC Southwest IN Thrift 47 2 09-30 02/95 22.00 7
FLKY First Lancaster Bncshrs of KY OTC Thrift 40 0 06-30 07/96 15.25 15
HWEN Home Financial Bancorp of IN OTC Central IN Thrift 39 0 06-30 07/96 15.00 7
LONF London Financial Corp. of OH OTC Central OH Thrift 38 1 09-30 04/96 15.00 8
JOAC Joachim Bancorp of MO OTC Eastern MO Thrift 36 1 03-31 12/95 14.25 11
New England Companies
- ---------------------
PBCT Peoples Bank, MHC of CT (37.4) (3) OTC Southwestern CT Div. 7,538 84 12-31 07/88 26.50 1,617
WBST Webster Financial Corp. of CT OTC Central CT Thrift 5,584 64 12-31 12/86 47.12 563
</TABLE>
<PAGE> 170
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New England Companies (continued)
- ---------------------------------
PHBK Peoples Heritage Fin Grp of ME (3) OTC ME,NH Div. 5,458 82 12-31 12/86 38.75 1,061
CFX CFX Corp of NH (3) AMEX S.W. NH,MA M.B. 1,744 23 12-31 02/87 18.94 249
EGFC Eagle Financial Corp. of CT OTC Western CT Thrift 1,512 19 09-30 02/87 31.50 143
SISB SIS Bank of Springfield MA (3) OTC Central MA Div. 1,404 21 12-31 02/95 28.25 160
ANDB Andover Bancorp, Inc. of MA (3) OTC Northeastern MA M.B. 1,210 11 12-31 05/86 30.12 155
FESX First Essex Bancorp of MA (3) OTC MA,NH Div. 1,147 10 12-31 08/87 17.62 132
AFCB Affiliated Comm BC, Inc of MA OTC MA Thrift 1,055 10 12-31 / 23.50 152
MDBK Medford Savings Bank of MA (3) OTC Eastern MA Thrift 1,054 16 12-31 03/86 30.75 140
FAB FirstFed America Bancorp of MA AMEX Southeast MA M.B. 980 14 12-31 01/97 17.75 155
FFES First FS&LA of E. Hartford CT OTC Central CT Thrift 975 12 12-31 06/87 29.00 77
BFD BostonFed Bancorp of MA AMEX Boston MA M.B. 941 8 12-31 10/95 19.12 114
MASB MassBank Corp. of Reading MA (3) OTC Eastern MA Thrift 901 14 12-31 05/86 51.50 138
DIBK Dime Financial Corp. of CT (3) OTC Central CT Thrift 814 10 12-31 07/86 26.25 135
MECH Mechanics SB of Hartford CT (3) OTC Hartford CT Thrift 789 0 12-31 06/96 20.00 106
NSSB Norwich Financial Corp. of CT (3) OTC Southeastern CT Thrift 701 19 12-31 11/86 22.00 119
NSSY Norwalk Savings Society of CT (3) OTC Southwest CT Thrift 617 8 12-31 06/94 30.00 72
BKC American Bank of Waterbury CT (3) AMEX Western CT Thrift 589 15 12-31 12/81 38.37 88
CBNH Community Bankshares Inc of NH (3) OTC Southcentral NH M.B. 581 9 06-30 05/86 39.75 98
MWBX Metro West of MA (3) OTC Eastern MA Thrift 555 9 12-31 10/86 5.69 79
PBKB People's SB of Brockton MA (3) OTC Southeastern MA Thrift 549 14 12-31 10/86 17.25 62
SOSA Somerset Savings Bank of MA (3) OTC Eastern MA R.E. 522 5 12-31 07/86 3.13 52
ABBK Abington Savings Bank of MA (3) OTC Southeastern MA M.B. 492 7 12-31 06/86 29.00 55
PBNB Peoples Sav. Fin. Corp. of CT (3) OTC Central CT Thrift 479 8 12-31 08/86 39.44 75
SWCB Sandwich Co-Op. Bank of MA (3) OTC Southeastern MA Thrift 475 11 04-30 07/86 32.75 62
PETE Primary Bank of NH (3) OTC Southern NH Ret. 436 8 12-31 10/93 26.75 56
BKCT Bancorp Connecticut of CT (3) OTC Central CT Thrift 414 3 12-31 07/86 26.75 68
EIRE Emerald Island Bancorp, MA (3) OTC Eastern MA R.E. 412 7 12-31 09/86 19.62 44
KSBK KSB Bancorp of Kingfield ME (3) OTC Western ME M.B. 397 J 8 12-31 06/93 15.50 19
WRNB Warren Bancorp of Peabody MA (3) OTC Eastern MA R.E. 361 6 12-31 07/86 17.75 67
LSBX Lawrence Savings Bank of MA (3) OTC Northeastern MA Thrift 342 6 12-31 05/86 12.62 54
CEBK Central Co-Op. Bank of MA (3) OTC Eastern MA Thrift 321 11 04-30 10/86 20.50 40
NMSB Newmil Bancorp. of CT (3) OTC Eastern CT Thrift 317 12 06-30 02/86 11.75 46
NHTB NH Thrift Bancshares of NH OTC Central NH Thrift 313 10 12-31 05/86 16.50 34
</TABLE>
<PAGE> 171
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
New England Companies (continued)
- ---------------------------------
POBS Portsmouth Bank Shrs Inc of NH (3) OTC Southeastern NH Thrift 263 3 12-31 02/88 17.12 101
NBN Northeast Bancorp of ME (3) OTC Eastern ME Thrift 248 8 06-30 08/87 14.75 19
TBK Tolland Bank of CT (3) AMEX Northern CT Thrift 237 7 12-31 12/86 18.25 21
HIFS Hingham Inst. for Sav. of MA (3) OTC Eastern MA Thrift 206 4 12-31 12/88 23.25 30
HPBC Home Port Bancorp, Inc. of MA (3) OTC Southeastern MA Thrift 189 2 12-31 08/88 20.25 37
BSBC Branford SB of CT (3) OTC New Haven CT R.E. 177 5 12-31 11/86 4.81 32
IPSW Ipswich SB of Ipswich MA (3) OTC Northwest MA Thrift 166 4 12-31 05/93 19.50 23
AFED AFSALA Bancorp, Inc. of NY OTC Central NY Thrift 149 P 4 09-30 10/96 15.75 23
MFLR Mayflower Co-Op. Bank of MA (3) OTC Southeastern MA Thrift 125 4 04-30 12/87 19.00 17
NTMG Nutmeg FS&LA of CT OTC CT M.B. 94 3 12-31 / 9.00 7
FCB Falmouth Co-Op Bank of MA (3) AMEX Southeast MA Thrift 90 1 09-30 03/96 16.37 24
MCBN Mid-Coast Bancorp of ME OTC Eastern ME Thrift 58 D 2 03-31 11/89 21.25 5
GLBK Glendale Co-op. Bank of MA (3) OTC Boston MA Thrift 37 D 1 04-30 01/94 27.00 7
North-West Companies
- --------------------
WAMU Washington Mutual Inc. of WA (3) OTC WA,OR,ID,UT,MT Div. 46,051 290 12-31 03/83 65.16 8,233
WFSL Washington FS&LA of Seattle WA OTC Western US Thrift 5,789 89 09-30 11/82 26.47 1,256
IWBK Interwest SB of Oak Harbor WA OTC Western WA Div. 1,772 31 12-31 / 39.00 313
STSA Sterling Financial Corp. of WA OTC WA,OR M.B. 1,557 41 06-30 / 19.00 105
FWWB First Savings Bancorp of WA (3) OTC Central WA Thrift 977 D 16 03-31 11/95 23.50 247
KFBI Klamath First Bancorp of OR OTC Southern OR Thrift 684 7 09-30 10/95 19.12 190
HRZB Horizon Financial Corp. of WA (3) OTC Northwest WA Thrift 515 12 03-31 08/86 15.87 117
FMSB First Mutual SB of Bellevue WA (3) OTC Western WA M.B. 417 D 6 12-31 12/85 20.62 56
CASB Cascade SB of Everett WA OTC Seattle WA Thrift 352 6 06-30 08/92 12.25 31
RVSB Rvrview SB,FSB MHC of WA(41.7) OTC Southwest WA M.B. 224 9 03-31 10/93 23.75 57
FBNW FirstBank Corp of Clarkston WA OTC West. WA/East ID Thrift 154 P 5 03-31 07/97 17.25 34
EFBC Empire Federal Bancorp of MT OTC Southern MT Thrift 110 P 3 06-30 01/97 14.37 37
</TABLE>
<PAGE> 172
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
South-East Companies
- --------------------
FFCH First Fin. Holdings Inc. of SC OTC CHARLESTON SC Div. 1,602 32 09-30 11/83 31.00 196
LIFB Life Bancorp of Norfolk VA OTC Southeast VA Thrift 1,408 20 12-31 10/94 24.25 239
MGNL Magna Bancorp of MS OTC MS,AL M.B. 1,383 62 06-30 03/91 26.00 358
AMFB American Federal Bank of SC OTC Northwest SC Thrift 1,307 41 12/31 01/89 35.12 388
FLFC First Liberty Fin. Corp. of GA OTC Georgia M.B. 1,248 29 9-30 12/83 23.37 181
ISBF ISB Financial Corp. of LA OTC SouthCentral LA Thrift 929 D 16 12-31 04/95 25.87 181
HFNC HFNC Financial Corp. of NC OTC Charlotte NC Thrift 843 8 06-30 12/95 16.25 279
VFFC Virginia First Savings of VA OTC Petersburg VA M.B. 817 23 06-30 01/78 23.00 134
CNIT Cenit Bancorp of Norfolk VA OTC Southeastern VA Thrift 707 D 15 12-31 08/92 49.50 81
EBSI Eagle Bancshares of Tucker GA OTC Atlanta GA Thrift 666 D 10 03-31 04/86 18.25 83
PALM Palfed, Inc. of Aiken SC OTC Southwest SC Thrift 656 19 12-31 12/85 16.25 86
VABF Va. Beach Fed. Fin. Corp of VA OTC Southeast VA M.B. 607 12 12-31 11/80 13.87 69
FFFC FFVA Financial Corp. of VA OTC Southern VA Thrift 550 11 12-31 10/94 27.12 123
CFCP Coastal Fin. Corp. of SC OTC SC Thrift 485 9 09-30 09/90 26.00 121
FSPT FirstSpartan Fin. Corp. of SC OTC Northwestern SC Thrift 465 P 5 06-30 07/97 36.62 162
CFBC Community First Bnkg Co. of GA OTC Westcentral GA Thrift 407 P 12 12-31 07/97 34.81 84
TSH Teche Holding Company of LA AMEX Southern LA Thrift 394 8 09-30 04/95 18.50 64
COOP Cooperative Bk.for Svgs. of NC OTC Eastern NC Thrift 349 17 03-31 08/91 26.00 39
FSFC First So.east Fin. Corp. of SC OTC Northwest SC Thrift 335 11 06-30 10/93 14.50 64
SOPN First SB, SSB, Moore Co. of NC OTC Central NC Thrift 271 5 06-30 01/94 22.25 82
UFRM United FS&LA of Rocky Mount NC OTC Eastern NC M.B. 270 9 12-31 07/80 12.25 38
ANA Acadiana Bancshares of LA (3) AMEX Southern LA Thrift 264 D 4 12-31 07/96 21.75 59
FSTC First Citizens Corp of GA OTC Western GA M.B. 257 D 8 03-31 03/86 28.75 53
SSFC South Street Fin. Corp. of NC (3) OTC South Central NC Thrift 239 2 09-30 10/96 17.00 76
MERI Meritrust FSB of Thibodaux LA OTC Southeast LA Thrift 229 8 12-31 / 41.00 32
PERT Perpetual of SC, MHC (46.8) OTC Northwest SC Thrift 223 D 5 09-30 10/96 34.00 51
FLAG Flag Financial Corp of GA OTC Western GA M.B. 222 4 12-31 12/86 14.37 29
CFTP Community Fed. Bancorp of MS OTC Northeast MS Thrift 206 1 09-30 03/96 18.37 79
PLE Pinnacle Bank of AL AMEX Central AL Thrift 200 5 06-30 12/86 25.50 23
ESX Essex Bancorp of VA AMEX VA,NC M.B. 180 12 12-31 / 1.62 2
GSFC Green Street Fin. Corp. of NC OTC Southern NC Thrift 174 3 09-30 04/96 17.87 77
FTF Texarkana Fst. Fin. Corp of AR AMEX Southwest AR Thrift 168 5 09-30 07/95 20.62 37
CFFC Community Fin. Corp. of VA OTC Central VA Thrift 167 D 3 03-31 03/88 22.75 29
</TABLE>
<PAGE> 173
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
South-East Companies (continued)
- --------------------------------
FGHC First Georgia Hold. Corp of GA OTC Southeastern GA Thrift 147 7 09-30 02/87 7.00 21
BFSB Bedford Bancshares of VA OTC Southern VA Thrift 132 3 09-30 08/94 23.50 27
FFBS FFBS Bancorp of Columbus MS OTC Columbus MS Thrift 129 3 06-30 06/93 26.00 40
PDB Piedmont Bancorp of NC AMEX Central NC Thrift 119 2 06-30 12/95 10.87 30
GSLA GS Financial Corp. of LA OTC New Orleans LA Thrift 117 P 3 12-31 04/97 15.44 53
GSLC Guaranty Svgs & Loan FA of VA OTC Charltsvl VA M.B. 116 D 3 06-30 / 11.94 18
CFNC Carolina Fincorp of NC (3) OTC Southcentral NC Thrift 109 4 06-30 11/96 15.37 28
SSM Stone Street Bancorp of NC AMEX Central NC Thrift 105 2 12-31 04/96 21.37 39
SRN Southern Banc Company of AL AMEX Northeast AL Thrift 105 4 06-30 10/95 15.63 19
TWIN Twin City Bancorp of TN OTC Northeast TN Thrift 104 3 12-31 01/95 20.25 17
KSAV KS Bancorp of Kenly NC OTC Central NC Thrift 101 3 12-31 12/93 18.50 16
CENB Century Bancshares of NC (3) OTC Charlotte NC Thrift 100 1 06-30 12/96 72.50 30
SZB SouthFirst Bancshares of AL AMEX Central AL Thrift 93 2 09-30 02/95 16.62 14
CCFH CCF Holding Company of GA OTC Atlanta GA Thrift 87 3 09-30 07/95 16.62 14
CZF Citisave Fin. Corp. of LA AMEX Baton Rouge LA Thrift 75 5 12-31 07/95 20.25 19
SCBS Southern Commun. Bncshrs of AL OTC NorthCentral AL Thrift 73 P 3 09-30 12/96 15.25 17
SSB Scotland Bancorp of NC AMEX S. Central NC Thrift 69 2 09-30 04/96 15.87 29
SCCB S. Carolina Comm. Bnshrs of SC OTC Central SC Thrift 46 1 06-30 07/94 19.00 13
MBSP Mitchell Bancorp of NC (3) OTC Western NC Thrift 34 1 12-31 07/96 16.50 16
South-West Companies
- --------------------
CBSA Coastal Bancorp of Houston TX OTC Houston TX M.B. 2,853 40 12-31 / 30.12 150
FBHC Fort Bend Holding Corp. of TX OTC Eastcentral TX M.B. 279 D 5 03-31 06/93 29.50 24
JXVL Jacksonville Bancorp of TX OTC East Central TX Thrift 218 6 09-30 04/96 15.25 39
ETFS East Texas Fin. Serv. of TX OTC Northeast TX Thrift 112 2 09-30 01/95 18.12 20
AABC Access Anytime Bancorp of NM OTC Eastern NM Thrift 106 3 12-31 08/86 6.12 7
GUPB GFSB Bancorp of Gallup NM OTC Northwest NM Thrift 87 1 06-30 06/95 19.75 17
</TABLE>
<PAGE> 174
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-1
Characteristics of Publicly-Traded Thrifts
July 21, 1997(1)
<TABLE>
<CAPTION>
Primary Operating Total Fiscal Conv. Stock Market
Ticker Financial Institution Exchg. Market Strat.(2) Assets Offices Year Date Price Value
- ------ ----------------------------------- ------ ----------------- -------- ------ ------- ---- ----- ------ ------
($Mil) ($) ($Mil)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Western Companies (Excl CA)
- ---------------------------
FFBA First Colorado Bancorp of Co OTC Denver CO Thrift 1,514 D 26 12-31 01/96 19.37 321
WSTR WesterFed Fin. Corp. of MT OTC MT Thrift 932 20 06-30 01/94 22.81 127
GBCI Glacier Bancorp of MT OTC Western MT Div. 552 13 06-30 03/84 19.00 129
UBMT United Fin. Corp. of MT OTC Central MT Thrift 108 4 12-31 09/86 24.00 29
TRIC Tri-County Bancorp of WY OTC Southeastern WY Thrift 86 2 12-31 09/93 24.25 15
CRZY Crazy Woman Creek Bncorp of WY OTC Northeast WY Thrift 52 1 09-30 03/96 14.12 13
Other Areas
- -----------
</TABLE>
NOTES: (1) Or most recent date available (M=March, S=September, D=December,
J=June, E=Estimated, and P=Pro Forma)
(2) Operating strategies are: Thrift=Traditional Thrift, M.B.=Mortgage
Banker, R.E.=Real Estate Developer, Div.=Diversified, and
Ret.=Retail Banking.
(3) FDIC savings bank.
Source: Corporate offering circulars, SNL Securities Quarterly Thrift Report,
and financial reports of publicly Traded Thrifts.
Date of Last Update: 07/21/97
<PAGE> 175
EXHIBIT III-2
Financial Analysis of New York Thrifts
<PAGE> 176
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-2
Market Pricing Comparatives
Prices As of July 17, 1997
<TABLE>
<CAPTION>
Market
Capitalization Per Share Data Pricing Ratios(3)
--------------- --------------- --------------------------------------
Core Book
Price/ Market 12-Mth Value/
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 21.52 143.89 1.14 15.62 21.23 135.09 16.89 139.10 18.78
All Public Companies 21.91 175.86 1.18 15.58 20.05 138.35 17.01 141.92 18.38
State of NY 25.68 386.93 1.33 17.39 21.27 136.22 17.40 141.76 18.89
Comparable Group
- ----------------
State of NY
- -----------
AFED AFSALA Bancorp, Inc. of NY 15.75 22.92 0.61 14.05 25.82 112.10 15.34 112.10 25.82
ALBK ALBANK Fin. Corp. of Albany NY 38.62 495.07 2.71 25.10 17.80 153.86 14.16 177.40 14.25
ALBC Albion Banc Corp. of Albion NY 24.00 6.00 0.93 23.62 NM 101.61 9.05 101.61 25.81
AHCI Ambanc Holding Co., Inc. of NY 16.00 70.27 -0.65 13.85 NM 115.52 14.70 115.52 NM
ASFC Astoria Financial Corp. of NY 46.88 983.45 2.65 27.86 26.19 168.27 12.79 202.24 17.69
CNY Carver Bancorp, Inc. of NY 12.25 28.35 -0.05 14.76 NM 82.99 6.69 86.69 NM
CATB Catskill Fin. Corp. of NY 16.00 80.43 0.85 14.70 19.05 108.84 29.36 108.84 18.82
DME Dime Bancorp, Inc. of NY 17.94 1860.72 1.36 10.16 16.92 176.57 10.08 178.33 13.19
DIME Dime Community Bancorp of NY 19.25 252.68 0.97 14.53 22.13 132.48 20.42 154.37 19.85
FIBC Financial Bancorp, Inc. of NY 18.75 32.78 1.42 14.98 24.35 125.17 12.18 125.75 13.20
FFIC Flushing Fin. Corp. of NY 20.25 163.78 0.89 16.06 23.55 126.09 20.19 126.09 22.75
GOSB GSB Financial Corp. of NY 14.75 33.16 0.44 13.78 28.37 107.04 28.97 107.04 NM
GPT GreenPoint Fin. Corp. of NY 63.25 2849.03 2.93 31.81 19.70 198.84 21.48 NM 21.59
HAVN Haven Bancorp of Woodhaven NY 37.25 161.29 3.32 23.13 16.34 161.05 9.34 161.68 11.22
JSBF JSB Financial, Inc. of NY 44.00 432.52 2.62 34.52 15.94 127.46 28.25 127.46 16.79
LISB Long Island Bancorp, Inc of NY 35.19 852.58 1.64 21.62 25.50 162.77 14.66 164.36 21.46
MBB MSB Bancorp of Middletown NY 22.25 63.12 0.48 19.72 NM 112.83 7.79 NM NM
NYB New York Bancorp, Inc. of NY 39.56 640.60 2.85 9.92 16.35 NM 20.18 NM 13.88
PEEK Peekskill Fin. Corp. of NY 15.37 49.23 0.81 14.58 24.40 105.42 26.96 105.42 18.98
PKPS Poughkeepsie Fin. Corp. of NY 8.13 102.40 0.32 5.75 NM 141.39 11.89 141.39 25.41
PSBK Progressive Bank, Inc. of NY 29.75 113.79 2.50 19.17 12.00 155.19 12.97 175.21 11.90
QCSB Queens County Bancorp of NY 48.75 542.93 2.07 18.47 23.78 NM 39.53 NM 23.55
RCSB RCSB Financial, Inc. of NY(7) 48.50 707.66 2.64 21.69 18.23 223.61 17.55 229.42 18.37
RELY Reliance Bancorp, Inc. of NY 28.75 253.66 1.76 17.56 24.78 163.72 13.17 233.55 16.34
RSLN Roslyn Bancorp, Inc. of NY 22.19 968.42 0.93 14.08 NM 157.60 33.99 158.39 23.86
SBFL SB Fngr Lakes MHC of NY (33.1) 17.75 10.47 0.54 11.27 NM 157.50 14.89 157.50 NM
SFED SFS Bancorp of Schenectady NY 18.25 23.20 1.08 17.26 NM 105.74 13.74 105.74 16.90
ROSE T R Financial Corp. of NY 23.87 420.88 1.54 11.90 13.56 200.59 12.36 200.59 15.50
TPNZ Tappan Zee Fin., Inc. of NY 16.62 25.50 0.48 14.00 NM 118.71 21.27 118.71 NM
ESBK The Elmira SB FSB of Elmira NY 22.50 15.89 0.85 19.87 25.28 113.24 7.14 118.30 26.47
GRTR The Greater New York SB of NY(7) 21.75 297.50 0.74 11.78 25.29 184.63 11.57 184.63 29.39
YFCB Yonkers Fin. Corp. of NY 16.62 52.85 0.92 13.68 24.81 121.49 18.58 121.49 18.07
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ ---------------- ---------------
Financial Institution Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------- ------ ------- ------ ------- ------- ------- ------- ------- -------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.38 1.78 29.11 1,113 13.05 0.78 0.62 5.31 0.85 7.36
All Public Companies 0.39 1.79 28.95 1,275 12.87 0.82 0.68 6.11 0.88 7.85
State of NY 0.44 1.59 28.38 2,409 12.53 1.15 0.67 6.08 0.84 7.73
Comparable Group
- ----------------
State of NY
- -----------
AFED AFSALA Bancorp, Inc. of NY 0.16 1.02 26.23 149 13.68 NA 0.59 4.34 0.59 4.34
ALBK ALBANK Fin. Corp. of Albany NY 0.60 1.55 22.14 3,496 9.20 0.92 0.81 8.74 1.01 10.91
ALBC Albion Banc Corp. of Albion NY 0.31 1.29 33.33 66 8.90 NA 0.09 0.93 0.38 3.93
AHCI Ambanc Holding Co., Inc. of NY 0.00 0.00 NM 478 12.72 1.06 -0.62 -4.16 -0.62 -4.16
ASFC Astoria Financial Corp. of NY 0.60 1.28 22.64 7,689 7.60 0.52 0.52 6.53 0.77 9.67
CNY Carver Bancorp, Inc. of NY 0.20 1.63 NM 424 8.06 1.53 -0.47 -5.07 -0.03 -0.33
CATB Catskill Fin. Corp. of NY 0.28 1.75 32.94 274 26.98 0.50 1.42 6.14 1.44 6.22
DME Dime Bancorp, Inc. of NY 0.00 0.00 0.00 18,465 5.71 2.36 0.57 10.83 0.73 13.89
DIME Dime Community Bancorp of NY 0.18 0.94 18.56 1,237 15.41 0.82 0.93 6.19 1.03 6.90
FIBC Financial Bancorp, Inc. of NY 0.40 2.13 28.17 269 9.73 2.77 0.51 5.14 0.95 9.49
FFIC Flushing Fin. Corp. of NY 0.24 1.19 26.97 811 16.01 0.27 0.90 5.16 0.93 5.34
GOSB GSB Financial Corp. of NY 0.00 0.00 0.00 114 27.06 NA 1.02 3.77 0.86 3.19
GPT GreenPoint Fin. Corp. of NY 1.00 1.58 34.13 13,261 10.80 2.84 1.05 9.89 0.96 9.03
HAVN Haven Bancorp of Woodhaven NY 0.60 1.61 18.07 1,728 5.80 0.78 0.62 10.26 0.91 14.94
JSBF JSB Financial, Inc. of NY 1.40 3.18 53.44 1,531 22.17 1.08 1.78 8.11 1.69 7.69
LISB Long Island Bancorp, Inc of NY 0.60 1.71 36.59 5,814 9.01 1.04 0.62 6.41 0.74 7.62
MBB MSB Bancorp of Middletown NY 0.60 2.70 NM 811 6.90 0.70 0.15 2.23 0.17 2.43
NYB New York Bancorp, Inc. of NY 0.80 2.02 28.07 3,175 5.06 1.29 1.31 24.82 1.55 29.23
PEEK Peekskill Fin. Corp. of NY 0.36 2.34 44.44 183 25.57 1.23 1.07 3.74 1.38 4.81
PKPS Poughkeepsie Fin. Corp. of NY 0.10 1.23 31.25 861 8.41 4.21 0.21 2.47 0.47 5.65
PSBK Progressive Bank, Inc. of NY 0.68 2.29 27.20 878 8.35 0.84 1.10 13.18 1.11 13.28
QCSB Queens County Bancorp of NY 1.00 2.05 48.31 1,373 14.98 0.75 1.72 10.84 1.74 10.94
RCSB RCSB Financial, Inc. of NY(7) 0.60 1.24 22.73 4,032 7.85 0.76 0.96 12.26 0.96 12.17
RELY Reliance Bancorp, Inc. of NY 0.64 2.23 36.36 1,927 8.04 0.75 0.56 6.66 0.85 10.11
RSLN Roslyn Bancorp, Inc. of NY 0.20 0.90 21.51 2,849 21.57 0.31 0.35 1.63 1.42 6.61
SBFL SB Fngr Lakes MHC of NY (33.1) 0.40 2.25 24.48 213 9.45 0.78 0.07 0.71 0.49 4.77
SFED SFS Bancorp of Schenectady NY 0.28 1.53 25.93 169 12.99 0.69 0.46 3.46 0.83 6.22
ROSE T R Financial Corp. of NY 0.52 2.18 33.77 3,404 6.16 0.40 0.98 15.66 0.85 13.70
TPNZ Tappan Zee Fin., Inc. of NY 0.20 1.20 41.67 120 17.92 NA 0.69 4.14 0.64 3.82
ESBK The Elmira SB FSB of Elmira NY 0.64 2.84 NM 223 6.30 0.83 0.28 4.48 0.27 4.28
GRTR The Greater New York SB of NY(7) 0.20 0.92 27.03 2,571 6.27 7.49 0.46 7.67 0.40 6.60
YFCB Yonkers Fin. Corp. of NY 0.20 1.20 21.74 284 15.30 0.73 0.84 5.28 1.16 7.25
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core
earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot guarantee
the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 177
EXHIBIT III-3
Financial Analysis of New Jersey Thrifts
<PAGE> 178
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit III-3
Market Pricing Comparatives
Prices As of July 17, 1997
<TABLE>
<CAPTION>
Market
Capitalization Per Share Data Pricing Ratios(3)
--------------- --------------- ---------------------------------------
Core Book
Price/ Market 12-Mth Value/
Financial Institution Share(1) Value EPS(2) Share P/E P/B P/A P/TB P/CORE
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) ($Mil) ($) ($) (X) (%) (%) (%) (x)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 21.52 143.89 1.14 15.62 21.23 135.09 16.89 139.10 18.78
All Public Companies 21.91 175.86 1.18 15.58 20.05 138.35 17.01 141.92 18.38
State of NJ 22.32 84.02 1.26 14.99 18.65 151.06 16.69 160.18 18.10
Comparable Group
- ----------------
State of NJ
- -----------
BKCO Bankers Corp. of NJ(7) 29.00 358.96 2.18 15.98 14.22 181.48 14.12 184.48 13.30
COFD Collective Bancorp Inc. of NJ(7) 47.19 966.64 2.97 18.85 19.26 NM 17.52 NM 15.89
FMCO FMS Financial Corp. of NJ 28.50 68.06 2.15 14.58 20.21 195.47 12.29 199.58 13.26
FBER First Bergen Bancorp of NJ 16.00 48.24 0.63 13.76 NM 116.28 19.12 116.28 25.40
FSPG First Home Bancorp of NJ 20.12 54.48 2.14 12.36 12.34 162.78 10.72 165.73 9.40
FSLA First SB SLA MHC of NJ (47.5) 27.50 93.61 1.22 13.00 NM 211.54 19.45 238.72 22.54
FSNJ First SB of NJ, MHC (45.9)(7) 33.50 47.07 0.47 16.18 NM 207.05 17.74 207.05 NM
IBSF IBS Financial Corp. of NJ 18.25 200.97 0.60 11.45 NM 159.39 27.16 159.39 NM
LVSB Lakeview SB of Paterson NJ 33.50 77.12 1.93 19.91 12.05 168.26 16.01 210.43 17.36
LFBI Little Falls Bancorp of NJ 16.50 45.29 0.53 14.30 NM 115.38 14.93 125.38 NM
OCFC Ocean Fin. Corp. of NJ 34.75 314.80 1.30 27.30 NM 127.29 22.68 127.29 26.73
PBCI Pamrapo Bancorp, Inc. of NJ 20.75 59.41 1.51 16.43 19.39 126.29 16.17 127.38 13.74
PFSB PennFed Fin. Services of NJ 27.25 131.37 2.01 19.55 20.19 139.39 10.49 169.04 13.56
PLSK Pulaski SB, MHC of NJ (46.0) 13.37 12.73 0.52 9.83 NM 136.01 16.34 136.01 25.71
PULS Pulse Bancorp of S. River NJ 20.37 62.35 1.75 13.14 17.41 155.02 12.09 155.02 11.64
RARB Raritan Bancorp. of Raritan NJ 23.00 52.83 1.58 12.54 15.86 183.41 14.08 186.84 14.56
SFIN Statewide Fin. Corp. of NJ 18.37 87.64 1.22 13.21 26.24 139.06 12.94 139.38 15.06
TSBS Trenton SB, FSB MHC of NJ(35.0 20.25 63.12 0.74 11.54 24.11 175.48 29.22 191.94 27.36
WYNE Wayne Bancorp of NJ 19.75 42.58 0.39 16.57 NM 119.19 17.35 119.19 NM
WWFC Westwood Fin. Corp. of NJ 21.25 13.71 1.24 15.43 NM 137.72 12.69 155.45 17.14
<CAPTION>
Dividends(4) Financial Characteristics(6)
----------------------- -------------------------------------------------------
Reported Core
Amount/ Payout Total Equity/ NPAs/ ---------------- --------------
Financial Institution Share Yield Ratio(5) Assets Assets Assets ROA ROE ROA ROE
- --------------------- ------- ------ ------- ------ ------- ------- ------- ------- ------- -------
($) (%) (%) ($Mil) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
SAIF-Insured Thrifts 0.38 1.78 29.11 1,113 13.05 0.78 0.62 5.31 0.85 7.36
All Public Companies 0.39 1.79 28.95 1,275 12.87 0.82 0.68 6.11 0.88 7.85
State of NJ 0.39 1.80 30.86 564 11.37 0.83 0.62 6.18 0.89 8.68
Comparable Group
- ----------------
State of NJ
- -----------
BKCO Bankers Corp. of NJ(7) 0.64 2.21 29.36 2,542 7.78 1.20 1.10 13.28 1.18 14.19
COFD Collective Bancorp Inc. of NJ(7) 1.00 2.12 33.67 5,518 7.00 0.40 0.95 13.58 1.15 16.46
FMCO FMS Financial Corp. of NJ 0.20 0.70 9.30 554 6.29 1.07 0.64 9.90 0.97 15.10
FBER First Bergen Bancorp of NJ 0.12 0.75 19.05 252 16.44 0.74 0.42 2.50 0.75 4.50
FSPG First Home Bancorp of NJ 0.40 1.99 18.69 508 6.59 0.79 0.90 13.90 1.19 18.24
FSLA First SB SLA MHC of NJ (47.5) 0.48 1.75 18.48 1,025 9.19 0.58 0.51 5.44 0.90 9.61
FSNJ First SB of NJ, MHC (45.9)(7) 0.50 1.49 NM 579 8.57 0.87 -0.34 -4.31 0.23 2.89
IBSF IBS Financial Corp. of NJ 0.32 1.75 53.33 740 17.04 0.15 0.52 2.73 0.88 4.68
LVSB Lakeview SB of Paterson NJ 0.25 0.75 12.95 482 9.52 NA 1.37 13.73 0.95 9.53
LFBI Little Falls Bancorp of NJ 0.20 1.21 37.74 303 12.94 0.90 0.25 1.78 0.50 3.48
OCFC Ocean Fin. Corp. of NJ 0.80 2.30 61.54 1,388 17.82 0.64 -0.04 -0.29 0.95 6.33
PBCI Pamrapo Bancorp, Inc. of NJ 1.00 4.82 66.23 367 12.80 3.60 0.84 5.70 1.18 8.04
PFSB PennFed Fin. Services of NJ 0.28 1.03 13.93 1,252 7.53 0.69 0.57 7.10 0.85 10.57
PLSK Pulaski SB, MHC of NJ (46.0) 0.30 2.24 26.53 169 12.01 0.68 0.28 2.34 0.64 5.29
PULS Pulse Bancorp of S. River NJ 0.70 3.44 40.00 516 7.80 0.75 0.72 8.47 1.08 12.67
RARB Raritan Bancorp. of Raritan NJ 0.48 2.09 30.38 375 7.68 0.46 0.93 12.31 1.01 13.41
SFIN Statewide Fin. Corp. of NJ 0.40 2.18 32.79 677 9.30 0.49 0.51 5.01 0.89 8.74
TSBS Trenton SB, FSB MHC of NJ(35.0 0.35 1.73 16.31 626 16.65 0.77 1.36 7.47 1.20 6.58
WYNE Wayne Bancorp of NJ 0.20 1.01 51.28 245 14.56 0.85 0.37 2.58 0.37 2.58
WWFC Westwood Fin. Corp. of NJ 0.20 0.94 16.13 108 9.22 0.14 0.43 4.44 0.80 8.22
</TABLE>
(1) Average of High/Low or Bid/Ask price per share.
(2) EPS (estimate core basis) is based on actual trailing twelve month data,
adjusted to omit non-operating items (including the SAIF assessment) on a
tax effected basis.
(3) P/E = Price to earnings; P/B = Price to book; P/A = Price to assets; P/TB =
Price to tangible book value; and P/CORE = Price to estimated core
earnings.
(4) Indicated twelve month dividend, based on last quarterly dividend declared.
(5) Indicated dividend as a percent of trailing twelve month estimated core
earnings.
(6) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month earnings and average equity and assets
balances.
(7) Excludes from averages those companies the subject of actual or rumored
acquisition activities or unusual operating characteristics.
Source: Corporate reports, offering circulars, and RP Financial, LC.
calculations. The information provided in this report has been
obtained from sources we believe are reliable, but we cannot guarantee
the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 179
EXHIBIT III-4
Peer Group Market Area Comparative Analysis
<PAGE> 180
Exhibit III-4
Peer Group Market Area Comparative Analysis
<TABLE>
<CAPTION>
Per Capita Income
Population Proj. ----------------- Deposit
------------------- Pop. 1990-97 1997-2002 Median % State Market
Institution County 1990 1997 2002 % Change % Change Age Amount Average Share(1)
- ----------- ------ ---- ---- ---- -------- -------- ------ ------ ------- -------
(000) (000)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALBANK Fin. Corp. of NY Albany 293 297 299 1.4% 0.9% 35.5 18,262 98.7% 9.1%
Dime Community Bancorp of NY Kings 2,301 2,268 2,246 -1.4% -1.0% 32.5 14,742 79.7% 2.0%
FMS Financial Corp. of NJ Burlington 395 414 428 4.9% 3.2% 35.3 23,829 98.5% 10.2%
First Home Bancorp of NJ Salem 65 69 71 5.3% 3.6% 36.8 17,926 74.1% 17.0%
Flushing Fin. Corp. of NY Queens 1,952 1,987 2,011 1.8% 1.2% 36.5 17,607 95.2% 1.2%
Haven Bancorp of NY Queens 1,952 1,987 2,011 1.8% 1.2% 36.5 17,607 95.2% 3.4%
IBS Financial Corp. of NJ Camden 503 506 509 0.7% 0.5% 34.4 20,872 86.3% 7.0%
JSB Financial, Inc. of NY Nassau 1,287 1,304 1,316 1.3% 0.9% 37.8 25,933 140.1% 1.0%
Ocean Fin. Corp of NJ Ocean 433.2 482.119 515.85 11.3% 7.0% 39.6 19,900 82.3% 11.4%
PennFed Fin. Services of NJ Essex 778 750 731 -3.6% -2.5% 35.2 24,065 99.5% 4.1%
Pulse Bancorp of S. River NJ Middlesex 672 708 732 5.3% 3.5% 35.7 24,231 100.2% 2.9%
Progressive Bank, Inc. of NY Dutchess 259 263 265 1.3% 0.9% 35.3 18,909 102.2% 9.1%
Queens County Bancorp of NY Queens 1,952 1,987 2,011 1.8% 1.2% 36.5 17,607 95.2% 3.3%
Reliance Bancorp of NY Nassau 1,287 1,304 1,316 1.3% 0.9% 37.8 25,933 140.1% 1.8%
Statewide Fin. Corp. of NJ Hudson 553 551 549 -0.5% -0.3% 34.6 19,588 81.0% 2.5%
TR Financial of NY Nassau 1,287 1,304 1,316 1.3% 0.9% 37.8 25,933 140.1% 2.6%
------ ----
AVERAGES: 998 1,011 1,020 2.1% 1.4% 36.1 20,809 100.5% 5.5%
MEDIANS: 724.99 728.811 731.81 1.4% 0.9% 36.1 19,744 96.8% 3.4%
STATEN ISLAND SB, OF NY RICHMOND 379 400 415 5.6% 3.7% 34.7 $19,101 103.2% 30.0%
</TABLE>
(1) Total institution deposits in headquarters county as percent of total
county deposits.
Sources: CACI, Inc, SNL Securities
<PAGE> 181
EXHIBIT IV-1
Stock Prices:
As of July 17, 1997
<PAGE> 182
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1
Weekly Thrift Market Line - Part One
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------ ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHC)
- ---------------------------------------------
SAIF-Insured Thrifts(314) 21.51 5,357 150.3 22.31 14.69 21.29 1.01 188.48 23.09
NYSE Traded Companies(8) 39.19 38,498 1,713.4 40.51 24.15 38.54 0.59 256.70 24.65
AMEX Traded Companies(18) 18.78 3,917 89.0 20.05 12.42 18.51 0.82 335.81 22.34
NASDAQ Listed OTC Companies(288) 21.14 4,454 107.3 21.90 14.54 20.94 1.04 176.14 23.08
California Companies(21) 25.67 18,850 727.5 26.68 15.57 25.30 0.97 122.62 26.41
Florida Companies(6) 23.56 12,190 301.0 24.67 14.80 23.22 0.95 129.75 24.70
Mid-Atlantic Companies(61) 22.21 6,239 149.2 22.84 14.33 22.00 1.23 175.84 29.74
Mid-West Companies(152) 20.47 3,309 86.5 21.31 14.48 20.25 1.07 208.25 19.88
New England Companies(10) 23.05 4,474 127.2 23.54 15.46 22.78 1.68 306.92 24.27
North-West Companies(7) 22.54 12,597 322.8 23.09 16.25 22.37 1.12 160.15 21.69
South-East Companies(45) 21.66 3,364 71.7 22.70 15.44 21.59 0.29 170.73 24.32
South-West Companies(6) 19.81 1,905 42.7 20.44 12.69 19.79 0.40 -9.33 16.35
Western Companies (Excl CA)(6) 20.59 5,282 105.7 21.04 14.46 20.23 1.86 302.97 22.06
Thrift Strategy(248) 20.57 3,498 80.1 21.34 14.32 20.39 0.89 163.32 22.22
Mortgage Banker Strategy(38) 26.10 12,860 461.7 26.88 16.69 25.91 0.09 248.38 29.86
Real Estate Strategy(11) 23.46 7,402 203.2 24.19 14.72 22.89 3.44 193.33 27.68
Diversified Strategy(12) 29.40 23,658 764.2 30.87 18.25 28.91 2.01 220.03 20.13
Retail Banking Strategy(5) 15.32 3,220 53.9 16.95 11.55 14.55 7.18 319.25 12.84
Companies Issuing Dividends(260) 21.82 5,293 153.4 22.68 14.84 21.62 0.90 200.74 22.76
Companies Without Dividends(54) 19.88 5,688 133.8 20.40 13.91 19.60 1.59 109.69 25.24
Equity/Assets less than 6%(23) 25.80 17,368 550.8 26.43 15.34 25.61 0.53 205.97 29.50
Equity/Assets 6-12%(153) 23.72 5,942 179.9 24.49 15.55 23.44 1.19 188.16 26.41
Equity/Assets greater than 12%(138) 18.55 2,791 54.4 19.43 13.71 18.40 0.91 167.17 18.20
Converted Last 3 Mths (no MHC)(8) 19.66 2,490 51.6 20.14 18.43 19.31 2.25 0.00 -12.54
Actively Traded Companies(44) 29.39 17,077 624.1 30.32 18.69 29.13 0.62 209.94 30.13
Market Value Below $20 Million(64) 16.71 891 13.9 17.35 12.33 16.46 1.58 196.82 18.53
Holding Company Structure(276) 21.58 5,212 151.1 22.43 14.84 21.40 0.85 172.18 22.07
Assets Over $1 Billion(63) 31.32 17,111 581.4 32.46 19.60 31.16 0.30 219.56 26.60
Assets $500 Million-$1 Billion(50) 21.05 5,525 106.2 21.68 13.66 20.65 1.69 213.31 29.34
Assets $250-$500 Million(67) 21.60 2,574 52.8 22.29 14.93 21.38 1.36 164.21 24.77
Assets less than $250 Million(134) 17.34 1,479 24.3 18.11 12.81 17.17 0.91 124.84 18.15
Goodwill Companies(124) 24.79 8,877 256.9 25.60 15.92 24.55 1.16 214.83 25.86
Non-Goodwill Companies(189) 19.39 3,080 81.3 20.20 13.90 19.19 0.92 147.99 21.12
Acquirors of FSLIC Cases(10) 32.58 33,583 1,428.1 33.28 20.65 31.71 4.19 248.71 29.00
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHC)
- ---------------------------------------------
SAIF-Insured Thrifts(314) 0.83 1.15 15.80 15.30 153.56
NYSE Traded Companies(8) 1.81 2.69 20.96 20.06 375.68
AMEX Traded Companies(18) 0.65 0.97 14.22 14.03 112.45
NASDAQ Listed OTC Companies(288) 0.81 1.12 15.74 15.23 149.39
California Companies(21) 0.92 1.32 16.50 15.48 256.44
Florida Companies(6) 0.99 0.96 13.53 12.82 176.63
Mid-Atlantic Companies(61) 0.96 1.35 15.90 15.22 167.37
Mid-West Companies(152) 0.79 1.08 15.95 15.63 136.82
New England Companies(10) 0.88 1.36 16.81 15.63 223.64
North-West Companies(7) 0.87 1.17 13.81 13.24 135.32
South-East Companies(45) 0.74 1.02 14.94 14.66 121.09
South-West Companies(6) 0.57 1.09 16.27 15.49 216.30
Western Companies (Excl CA)(6) 0.86 1.03 16.01 15.30 104.07
Thrift Strategy(248) 0.77 1.09 16.02 15.57 138.82
Mortgage Banker Strategy(38) 1.19 1.52 15.81 14.91 229.62
Real Estate Strategy(11) 0.75 1.33 14.36 14.05 219.48
Diversified Strategy(12) 1.49 1.75 12.84 12.47 178.63
Retail Banking Strategy(5) 0.20 0.20 13.18 12.82 147.30
Companies Issuing Dividends(260) 0.91 1.23 15.90 15.38 151.50
Companies Without Dividends(54) 0.46 0.77 15.27 14.86 164.31
Equity/Assets less than 6%(23) 1.06 1.66 13.95 12.99 288.92
Equity/Assets 6-12%(153) 1.01 1.38 15.98 15.20 192.67
Equity/Assets greater than 12%(138) 0.61 0.84 15.92 15.78 91.66
Converted Last 3 Mths (no MHC)(8) 0.44 0.62 17.06 16.99 85.42
Actively Traded Companies(44) 1.43 1.95 17.23 16.63 232.84
Market Value Below $20 Million(64) 0.52 0.81 15.22 15.11 117.56
Holding Company Structure(276) 0.81 1.13 16.09 15.60 151.29
Assets Over $1 Billion(63) 1.39 1.90 17.92 16.60 254.35
Assets $500 Million-$1 Billion(50) 0.86 1.08 14.14 13.41 154.03
Assets $250-$500 Million(67) 0.82 1.18 16.45 15.95 165.06
Assets less than $250 Million(134) 0.59 0.84 15.16 15.11 103.82
Goodwill Companies(124) 1.03 1.42 16.21 15.06 202.14
Non-Goodwill Companies(189) 0.70 0.98 15.54 15.46 122.11
Acquirors of FSLIC Cases(10) 1.52 2.32 18.36 17.36 300.33
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 183
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
BIF-Insured Thrifts(69) 24.07 10,219 351.1 24.71 14.97 23.65 1.86 189.32 27.75
NYSE Traded Companies(3) 35.23 52,819 1,649.1 36.77 18.25 34.81 2.85 261.39 33.68
AMEX Traded Companies(5) 22.74 4,161 88.4 23.75 13.99 22.62 0.67 105.17 36.47
NASDAQ Listed OTC Companies(61) 23.52 8,229 298.4 24.07 14.86 23.07 1.92 193.06 26.47
California Companies(3) 18.79 6,820 138.9 18.91 11.12 18.04 4.43 444.44 29.30
Mid-Atlantic Companies(18) 25.45 17,548 495.9 26.48 15.26 25.00 1.99 122.84 27.57
Mid-West Companies(2) 12.25 942 11.5 12.50 9.00 12.00 2.08 0.00 21.05
New England Companies(37) 22.53 4,842 113.1 23.15 14.01 22.14 1.59 199.97 27.79
North-West Companies(4) 31.29 36,744 2,163.4 31.67 16.63 30.73 1.71 152.04 35.79
South-East Companies(5) 28.62 2,091 42.0 28.82 21.80 28.32 1.54 0.00 22.00
Thrift Strategy(45) 24.42 5,024 159.5 25.07 15.64 23.99 1.72 192.53 27.44
Mortgage Banker Strategy(10) 22.39 29,674 587.7 23.37 13.70 22.02 1.88 185.64 27.45
Real Estate Strategy(6) 14.81 4,671 64.4 15.26 9.34 14.55 2.96 237.02 21.37
Diversified Strategy(6) 32.86 35,881 1,953.5 33.31 16.72 32.41 1.07 174.46 37.79
Retail Banking Strategy(2) 22.50 706 15.9 22.50 14.75 21.25 5.88 56.58 23.29
Companies Issuing Dividends(55) 25.66 9,146 368.0 26.37 16.08 25.23 1.76 184.91 26.97
Companies Without Dividends(14) 16.62 15,258 271.7 16.92 9.71 16.22 2.34 222.41 31.31
Equity/Assets less than 6%(5) 28.71 61,550 2,584.4 29.02 14.44 28.11 2.76 154.95 44.20
Equity/Assets 6-12%(45) 23.82 6,239 194.1 24.55 14.52 23.36 2.14 199.25 27.56
Equity/Assets greater than 12%(19) 23.49 6,588 155.7 24.01 16.12 23.18 0.98 38.97 23.83
Actively Traded Companies(24) 26.27 17,481 673.1 26.92 15.37 25.88 1.35 235.51 31.84
Market Value Below $20 Million(8) 16.63 899 14.7 16.99 11.43 16.44 1.03 120.70 14.09
Holding Company Structure(45) 24.51 10,176 385.3 25.09 15.49 24.03 1.97 192.42 28.14
Assets Over $1 Billion(17) 31.76 30,936 1,227.9 32.75 17.36 31.28 1.56 199.92 33.70
Assets $500 Million-$1 Billion(16) 24.30 5,804 117.3 25.08 15.74 24.03 0.60 144.34 28.28
Assets $250-$500 Million(19) 20.02 3,032 56.4 20.51 12.42 19.39 3.04 237.20 26.94
Assets less than $250 Million(17) 20.47 1,711 26.0 20.77 14.39 20.14 2.21 171.96 22.85
Goodwill Companies(31) 26.15 16,846 651.6 26.94 15.67 25.91 1.15 184.04 30.01
Non-Goodwill Companies(37) 22.33 4,660 99.0 22.84 14.38 21.74 2.45 197.85 25.93
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHC)
- --------------------------------------------
BIF-Insured Thrifts(69) 1.40 1.43 15.58 14.78 155.41
NYSE Traded Companies(3) 1.90 1.85 19.56 14.99 232.57
AMEX Traded Companies(5) 1.22 1.21 15.32 14.92 149.94
NASDAQ Listed OTC Companies(61) 1.39 1.42 15.37 14.76 151.24
California Companies(3) 1.28 1.18 12.30 12.28 148.48
Mid-Atlantic Companies(18) 1.21 1.30 16.28 14.39 164.62
Mid-West Companies(2) 0.25 0.38 13.57 12.80 53.10
New England Companies(37) 1.64 1.60 14.04 13.51 162.76
North-West Companies(4) 1.00 1.30 13.28 13.02 170.36
South-East Companies(5) 1.21 1.27 26.67 26.67 97.84
Thrift Strategy(45) 1.41 1.40 16.83 15.86 148.58
Mortgage Banker Strategy(10) 1.27 1.45 13.37 13.23 165.13
Real Estate Strategy(6) 1.22 1.14 9.04 9.03 105.26
Diversified Strategy(6) 1.74 1.99 13.96 12.92 216.60
Retail Banking Strategy(2) 0.89 0.85 19.87 19.02 315.32
Companies Issuing Dividends(55) 1.53 1.55 16.41 15.45 163.64
Companies Without Dividends(14) 0.80 0.83 11.72 11.62 116.75
Equity/Assets less than 6%(5) 1.07 1.36 10.77 10.38 203.31
Equity/Assets 6-12%(45) 1.66 1.62 14.74 13.57 178.01
Equity/Assets greater than 12%(19) 0.88 0.99 18.73 18.68 91.18
Actively Traded Companies(24) 1.72 1.74 14.88 14.14 180.91
Market Value Below $20 Million(8) 0.67 0.74 15.10 14.49 136.04
Holding Company Structure(45) 1.33 1.38 15.90 15.20 144.16
Assets Over $1 Billion(17) 1.73 1.86 15.89 14.38 197.31
Assets $500 Million-$1 Billion(16) 1.57 1.52 15.62 14.38 168.59
Assets $250-$500 Million(19) 1.22 1.22 13.53 13.31 133.62
Assets less than $250 Million(17) 1.10 1.12 17.18 16.91 124.35
Goodwill Companies(31) 1.50 1.57 15.62 13.86 192.94
Non-Goodwill Companies(37) 1.31 1.30 15.55 15.55 123.93
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 184
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(21) 21.70 5,045 40.5 22.92 14.26 21.64 0.41 206.17 25.72
BIF-Insured Thrifts(2) 21.25 32,145 206.0 21.88 11.42 21.88 -2.89 236.72 45.98
NASDAQ Listed OTC Companies(23) 21.66 7,755 57.0 22.82 13.98 21.66 0.08 216.35 27.97
Florida Companies(3) 29.29 5,550 73.8 30.12 17.25 29.62 -0.27 0.00 18.12
Mid-Atlantic Companies(10) 18.76 7,085 45.3 19.39 12.23 18.69 0.31 175.00 33.64
Mid-West Companies(7) 19.31 2,028 14.4 21.71 13.99 19.48 -0.64 237.33 22.64
New England Companies(1) 26.50 61,017 401.6 27.25 13.58 27.25 -2.75 236.72 37.66
South-East Companies(1) 34.00 1,505 24.0 34.00 20.25 32.00 6.25 0.00 40.21
Thrift Strategy(21) 21.40 4,952 38.9 22.58 14.00 21.37 0.23 206.17 27.40
Diversified Strategy(1) 26.50 61,017 401.6 27.25 13.58 27.25 -2.75 236.72 37.66
Companies Issuing Dividends(22) 22.06 8,042 59.3 23.24 14.10 22.06 0.13 216.35 27.97
Companies Without Dividends(1) 14.00 2,300 14.5 14.75 11.62 14.12 -0.85 0.00 0.00
Equity/Assets 6-12%(15) 22.70 10,196 74.9 24.29 14.31 22.89 -0.51 216.35 27.30
Equity/Assets greater than 12%(8) 19.71 3,223 23.8 20.09 13.36 19.37 1.18 0.00 29.71
Actively Traded Companies(1) 27.50 7,247 93.6 29.50 14.09 28.00 -1.79 175.00 48.65
Holding Company Structure(1) 27.50 7,247 93.6 29.50 14.09 28.00 -1.79 175.00 48.65
Assets Over $1 Billion(5) 27.45 21,565 154.3 28.57 15.38 27.70 -0.17 205.86 31.66
Assets $500 Million-$1 Billion(4) 21.54 6,908 61.9 22.04 13.46 21.54 0.04 0.00 19.75
Assets $250-$500 Million(4) 20.81 2,540 18.7 24.06 15.17 20.94 -0.35 237.33 20.19
Assets less than $250 Million(10) 18.50 2,050 13.6 18.89 12.70 18.30 0.47 0.00 34.20
Goodwill Companies(9) 25.19 15,807 115.3 27.61 15.29 25.47 -0.61 216.35 27.67
Non-Goodwill Companies(14) 19.30 2,388 18.2 19.62 13.11 19.12 0.55 0.00 28.21
MHC Institutions(23) 21.66 7,755 57.0 22.82 13.98 21.66 0.08 216.35 27.97
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(21) 0.63 0.99 12.74 12.42 123.69
BIF-Insured Thrifts(2) 0.67 0.65 9.38 9.38 98.25
NASDAQ Listed OTC Companies(23) 0.64 0.95 12.40 12.11 121.14
Florida Companies(3) 1.08 1.53 15.32 15.05 166.11
Mid-Atlantic Companies(10) 0.40 0.69 11.05 10.51 98.91
Mid-West Companies(7) 0.59 0.97 12.09 12.07 127.11
New England Companies(1) 1.33 1.06 10.39 10.38 123.54
South-East Companies(1) 1.00 1.41 19.69 19.69 148.17
Thrift Strategy(21) 0.60 0.95 12.51 12.20 121.02
Diversified Strategy(1) 1.33 1.06 10.39 10.38 123.54
Companies Issuing Dividends(22) 0.66 0.98 12.52 12.21 124.09
Companies Without Dividends(1) 0.24 0.35 10.21 10.21 65.23
Equity/Assets 6-12%(15) 0.69 1.07 12.49 12.12 142.08
Equity/Assets greater than 12%(8) 0.55 0.74 12.24 12.10 82.27
Actively Traded Companies(1) 0.69 1.22 13.00 11.52 141.40
Holding Company Structure(1) 0.69 1.22 13.00 11.52 141.40
Assets Over $1 Billion(5) 0.97 1.30 12.74 11.83 149.25
Assets $500 Million-$1 Billion(4) 0.72 0.93 13.06 12.70 114.98
Assets $250-$500 Million(4) 0.74 1.16 12.82 12.79 146.42
Assets less than $250 Million(10) 0.35 0.64 11.73 11.73 93.25
Goodwill Companies(9) 0.86 1.15 12.58 11.86 139.54
Non-Goodwill Companies(14) 0.49 0.82 12.28 12.28 108.88
MHC Institutions(23) 0.64 0.95 12.40 12.11 121.14
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
(9) For MHC institutions, market value reflects share price multiplied by
public (non-MHC) shares.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 185
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA 50.37 97,336 4,902.8 50.37 24.50 47.00 7.17 168.64 54.98
CSA Coast Savings Financial of CA 46.56 18,593 865.7 48.75 30.25 46.31 0.54 302.77 27.14
CFB Commercial Federal Corp. of NE 39.00 21,523 839.4 39.25 24.25 39.00 0.00 956.91 21.88
DME Dime Bancorp, Inc. of NY* 17.94 103,719 1,860.7 19.00 11.87 17.12 4.79 78.33 21.63
DSL Downey Financial Corp. of CA 21.50 26,733 574.8 23.75 12.86 23.37 -8.00 97.97 15.03
FRC First Republic Bancorp of CA* 24.50 9,693 237.5 24.75 12.62 23.37 4.84 444.44 46.27
FED FirstFed Fin. Corp. of CA 34.06 10,560 359.7 34.06 17.12 33.75 0.92 110.90 54.82
GLN Glendale Fed. Bk, FSB of CA 26.87 50,306 1,351.7 28.00 17.50 27.62 -2.72 65.35 15.57
GDW Golden West Fin. Corp. of CA 76.00 56,739 4,312.2 76.00 53.50 72.50 4.83 190.19 20.41
GPT GreenPoint Fin. Corp. of NY* 63.25 45,044 2,849.0 66.56 30.25 63.94 -1.08 N.A. 33.16
WES Westcorp Inc. of Orange CA 19.12 26,195 500.8 23.87 13.25 18.75 1.97 160.85 -12.61
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* 21.75 2,731 59.4 22.25 11.69 20.50 6.10 N.A. 46.27
BKC American Bank of Waterbury CT* 38.37 2,302 88.3 39.00 25.50 38.75 -0.98 104.64 37.04
BFD BostonFed Bancorp of MA 19.12 5,963 114.0 19.12 11.62 19.00 0.63 N.A. 29.63
CFX CFX Corp of NH* 18.94 13,144 248.9 21.00 12.38 18.87 0.37 59.16 22.19
CZF Citisave Fin. Corp. of LA(8) 20.25 962 19.5 20.25 13.00 20.12 0.65 N.A. 44.64
CBK Citizens First Fin.Corp. of IL 16.12 2,789 45.0 16.75 9.50 15.75 2.35 N.A. 12.18
ESX Essex Bancorp of VA(8) 1.62 1,055 1.7 2.75 1.00 1.37 18.25 -90.33 -26.03
FCB Falmouth Co-Op Bank of MA* 16.37 1,455 23.8 16.50 10.62 16.50 -0.79 N.A. 24.77
FAB FirstFed America Bancorp of MA 17.75 8,707 154.5 18.56 13.62 17.69 0.34 N.A. N.A.
GAF GA Financial Corp. of PA 18.19 8,408 152.9 19.50 10.25 18.12 0.39 N.A. 20.30
KNK Kankakee Bancorp of IL 30.75 1,420 43.7 30.75 18.50 29.75 3.36 207.50 24.24
KYF Kentucky First Bancorp of KY 11.87 1,319 15.7 15.12 10.56 12.25 -3.10 N.A. 9.20
NYB New York Bancorp, Inc. of NY 39.56 16,193 640.6 40.00 17.67 38.50 2.75 457.97 53.16
PDB Piedmont Bancorp of NC 10.87 2,751 29.9 19.12 9.25 10.25 6.05 N.A. 3.52
PLE Pinnacle Bank of AL 25.50 890 22.7 22.62 16.12 24.75 3.03 277.78 46.80
SSB Scotland Bancorp of NC 15.87 1,840 29.2 16.75 11.87 16.00 -0.81 N.A. 12.39
SZB SouthFirst Bancshares of AL 16.62 821 13.6 16.62 12.12 16.44 1.09 N.A. 25.43
SRN Southern Banc Company of AL 15.63 1,230 19.2 15.63 12.25 15.63 0.00 N.A. 19.13
SSM Stone Street Bancorp of NC 21.37 1,825 39.0 27.25 16.37 21.12 1.18 N.A. 4.24
TSH Teche Holding Company of LA 18.50 3,438 63.6 19.37 12.00 17.62 4.99 N.A. 28.74
FTF Texarkana Fst. Fin. Corp of AR 20.62 1,790 36.9 21.25 13.62 20.87 -1.20 N.A. 31.93
THR Three Rivers Fin. Corp. of MI 16.50 824 13.6 16.62 12.62 16.25 1.54 N.A. 17.86
TBK Tolland Bank of CT* 18.25 1,172 21.4 20.00 9.75 18.50 -1.35 151.72 52.08
WSB Washington SB, FSB of MD 6.25 4,247 26.5 7.00 4.38 7.00 -10.71 400.00 28.34
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 30.25 698 21.1 33.25 24.76 31.50 -3.97 N.A. 6.14
AFED AFSALA Bancorp, Inc. of NY 15.75 1,455 22.9 15.75 11.31 15.63 0.77 N.A. 31.25
ALBK ALBANK Fin. Corp. of Albany NY 38.62 12,819 495.1 41.00 25.12 38.69 -0.18 66.11 23.11
AMFC AMB Financial Corp. of IN 14.75 1,068 15.8 15.00 10.25 14.75 0.00 N.A. 11.32
ASBP ASB Financial Corp. of OH 12.12 1,721 20.9 18.25 11.50 12.25 -1.06 N.A. -6.77
ABBK Abington Savings Bank of MA(8)* 29.00 1,894 54.9 29.00 15.75 27.75 4.50 338.07 48.72
AABC Access Anytime Bancorp of NM 6.12 1,143 7.0 6.50 5.25 6.12 0.00 -9.33 11.27
AFBC Advance Fin. Bancorp of WV 16.00 1,084 17.3 16.00 12.75 15.00 6.67 N.A. N.A.
AADV Advantage Bancorp of WI 39.50 3,232 127.7 41.25 31.25 39.25 0.64 329.35 22.48
AFCB Affiliated Comm BC, Inc of MA 23.50 6,456 151.7 25.00 13.50 23.87 -1.55 N.A. 37.43
ALBC Albion Banc Corp. of Albion NY 24.00 250 6.0 24.00 16.50 22.50 6.67 84.62 43.28
ABCL Allied Bancorp of IL 30.00 5,334 160.0 31.25 22.00 30.12 -0.40 200.00 20.00
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA 1.45 2.89 19.69 16.62 500.30
CSA Coast Savings Financial of CA 0.73 2.31 23.45 23.12 473.14
CFB Commercial Federal Corp. of NE 1.99 2.84 18.99 16.90 320.67
DME Dime Bancorp, Inc. of NY* 1.06 1.36 10.16 10.06 178.03
DSL Downey Financial Corp. of CA 0.84 1.42 14.98 14.76 205.16
FRC First Republic Bancorp of CA* 1.42 1.26 16.70 16.69 225.26
FED FirstFed Fin. Corp. of CA 0.95 1.89 18.48 18.24 391.07
GLN Glendale Fed. Bk, FSB of CA 0.65 1.63 17.31 16.10 306.00
GDW Golden West Fin. Corp. of CA 6.55 8.02 42.54 42.54 679.07
GPT GreenPoint Fin. Corp. of NY* 3.21 2.93 31.81 18.23 294.41
WES Westcorp Inc. of Orange CA 1.29 0.51 12.21 12.17 130.02
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* 0.29 0.30 17.24 17.24 96.80
BKC American Bank of Waterbury CT* 3.02 2.62 20.39 19.49 255.68
BFD BostonFed Bancorp of MA 0.64 0.88 14.05 13.56 157.81
CFX CFX Corp of NH* 0.93 1.17 10.18 9.49 132.72
CZF Citisave Fin. Corp. of LA(8) 0.40 0.61 12.95 12.95 77.90
CBK Citizens First Fin.Corp. of IL 0.25 0.53 14.26 14.26 97.39
ESX Essex Bancorp of VA(8) -7.54 -3.77 0.12 -0.08 170.55
FCB Falmouth Co-Op Bank of MA* 0.52 0.50 15.17 15.17 62.04
FAB FirstFed America Bancorp of MA -0.28 0.44 14.03 14.03 112.52
GAF GA Financial Corp. of PA 0.77 0.97 13.76 13.62 79.73
KNK Kankakee Bancorp of IL 1.51 1.94 25.74 24.10 241.11
KYF Kentucky First Bancorp of KY 0.53 0.70 10.86 10.86 67.42
NYB New York Bancorp, Inc. of NY 2.42 2.85 9.92 9.92 196.07
PDB Piedmont Bancorp of NC -0.14 0.36 7.31 7.31 43.08
PLE Pinnacle Bank of AL 1.26 1.89 17.34 16.78 224.27
SSB Scotland Bancorp of NC 0.55 0.67 13.74 13.74 37.46
SZB SouthFirst Bancshares of AL 0.05 0.30 15.82 15.82 113.17
SRN Southern Banc Company of AL 0.13 0.44 14.42 14.27 85.35
SSM Stone Street Bancorp of NC 0.99 1.15 20.72 20.72 57.80
TSH Teche Holding Company of LA 0.80 1.10 15.23 15.23 114.47
FTF Texarkana Fst. Fin. Corp of AR 1.28 1.59 15.05 15.05 93.91
THR Three Rivers Fin. Corp. of MI 0.61 0.88 15.22 15.22 110.64
TBK Tolland Bank of CT* 1.35 1.45 13.63 13.21 202.48
WSB Washington SB, FSB of MD 0.30 0.44 5.05 5.05 60.83
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 0.91 0.13 31.17 30.48 391.25
AFED AFSALA Bancorp, Inc. of NY 0.61 0.61 14.05 14.05 102.70
ALBK ALBANK Fin. Corp. of Albany NY 2.17 2.71 25.10 21.77 272.75
AMFC AMB Financial Corp. of IN 0.55 0.69 14.29 14.29 87.68
ASBP ASB Financial Corp. of OH 0.39 0.57 10.00 10.00 63.58
ABBK Abington Savings Bank of MA(8)* 1.98 1.72 17.86 16.00 259.80
AABC Access Anytime Bancorp of NM -0.57 -0.22 6.34 6.34 93.17
AFBC Advance Fin. Bancorp of WV 0.35 0.71 14.76 14.76 95.55
AADV Advantage Bancorp of WI 1.08 2.68 27.92 25.87 316.04
AFCB Affiliated Comm BC, Inc of MA 1.45 1.66 15.96 15.86 163.41
ALBC Albion Banc Corp. of Albion NY 0.22 0.93 23.62 23.62 265.26
ABCL Allied Bancorp of IL 0.63 1.06 22.93 22.63 246.18
</TABLE>
<PAGE> 186
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ATSB AmTrust Capital Corp. of IN 12.50 526 6.6 12.75 8.50 12.56 -0.48 N.A. 25.00
AHCI Ambanc Holding Co., Inc. of NY* 16.00 4,392 70.3 16.62 9.50 16.25 -1.54 N.A. 42.22
ASBI Ameriana Bancorp of IN 18.50 3,260 60.3 18.50 13.25 17.87 3.53 100.43 15.63
AFFFZ America First Fin. Fund of CA(8) 39.37 6,011 236.7 39.56 26.00 39.50 -0.33 109.97 30.15
AMFB American Federal Bank of SC(8) 35.12 11,035 387.5 35.25 15.50 34.75 1.06 639.37 86.12
ANBK American Nat'l Bancorp of MD(8) 19.31 3,613 69.8 19.50 9.75 19.31 0.00 N.A. 59.32
ABCW Anchor Bancorp Wisconsin of WI 50.50 4,581 231.3 50.50 33.00 50.00 1.00 71.94 41.26
ANDB Andover Bancorp, Inc. of MA* 30.12 5,146 155.0 31.12 19.17 30.25 -0.43 180.19 17.56
ASFC Astoria Financial Corp. of NY 46.88 20,978 983.4 47.50 24.62 46.62 0.56 78.59 27.15
AVND Avondale Fin. Corp. of IL 13.75 3,525 48.5 18.50 12.75 13.75 0.00 N.A. -19.68
BKCT Bancorp Connecticut of CT* 26.75 2,560 68.5 26.75 20.00 24.50 9.18 205.71 18.89
BPLS Bank Plus Corp. of CA 11.75 18,245 214.4 13.75 8.75 11.62 1.12 N.A. 2.17
BWFC Bank West Fin. Corp. of MI 13.50 1,783 24.1 14.25 10.25 13.50 0.00 N.A. 27.12
BANC BankAtlantic Bancorp of FL 14.50 17,978 260.7 14.62 8.24 14.50 0.00 178.85 35.51
BKUNA BankUnited SA of FL 9.81 8,847 86.8 11.25 7.25 9.87 -0.61 80.66 -1.90
BKCO Bankers Corp. of NJ(8)* 29.00 12,378 359.0 29.37 17.25 29.12 -0.41 364.00 44.14
BVCC Bay View Capital Corp. of CA 26.06 12,979 338.2 28.62 16.56 26.75 -2.58 31.95 22.98
BFSB Bedford Bancshares of VA 23.50 1,142 26.8 24.50 16.50 23.75 -1.05 123.81 33.37
BFFC Big Foot Fin. Corp. of IL 17.00 2,513 42.7 17.00 12.31 16.00 6.25 N.A. 30.77
BSBC Branford SB of CT* 4.81 6,559 31.5 4.81 2.87 4.50 6.89 126.89 24.29
BYFC Broadway Fin. Corp. of CA 10.75 893 9.6 11.25 9.00 11.25 -4.44 N.A. 16.22
CBCO CB Bancorp of Michigan City IN(8) 34.25 1,162 39.8 34.75 17.00 34.25 0.00 211.36 44.21
CBES CBES Bancorp of MO 17.50 1,025 17.9 17.87 12.62 17.87 -2.07 N.A. 22.81
CCFH CCF Holding Company of GA 16.62 865 14.4 16.75 11.75 16.62 0.00 N.A. 12.68
CENF CENFED Financial Corp. of CA 34.44 5,760 198.4 34.87 19.55 33.87 1.68 119.64 29.52
CFSB CFSB Bancorp of Lansing MI 26.37 5,167 136.3 26.62 16.11 26.62 -0.94 193.00 48.73
CKFB CKF Bancorp of Danville KY 19.25 927 17.8 20.75 17.50 19.25 0.00 N.A. -4.94
CNSB CNS Bancorp of MO 16.87 1,653 27.9 17.50 11.00 16.75 0.72 N.A. 11.57
CSBF CSB Financial Group Inc of IL* 12.25 942 11.5 12.50 9.00 12.00 2.08 N.A. 21.05
CBCI Calumet Bancorp of Chicago IL 38.12 2,238 85.3 39.50 27.75 38.25 -0.34 88.25 14.65
CAFI Camco Fin. Corp. of OH 18.37 3,215 59.1 18.62 14.05 17.75 3.49 N.A. 21.49
CMRN Cameron Fin. Corp. of MO 17.37 2,682 46.6 18.00 13.50 17.50 -0.74 N.A. 8.56
CAPS Capital Savings Bancorp of MO 17.00 1,892 32.2 18.25 9.06 17.50 -2.86 28.30 30.77
CFNC Carolina Fincorp of NC* 15.37 1,851 28.4 15.37 13.00 15.25 0.79 N.A. 14.96
CNY Carver Bancorp, Inc. of NY 12.25 2,314 28.3 12.25 7.37 12.00 2.08 96.00 48.48
CASB Cascade SB of Everett WA(8) 12.25 2,568 31.5 16.80 10.40 13.00 -5.77 -4.30 -5.04
CATB Catskill Fin. Corp. of NY* 16.00 5,027 80.4 16.50 9.87 15.75 1.59 N.A. 14.29
CNIT Cenit Bancorp of Norfolk VA 49.50 1,640 81.2 50.00 31.75 49.00 1.02 211.71 19.28
CEBK Central Co-Op. Bank of MA* 20.50 1,965 40.3 20.69 14.75 20.69 -0.92 290.48 17.14
CENB Century Bancshares of NC* 72.50 407 29.5 72.50 62.00 72.50 0.00 N.A. 11.54
CBSB Charter Financial Inc. of IL 18.25 4,220 77.0 18.25 10.87 17.75 2.82 N.A. 46.00
COFI Charter One Financial of OH 54.62 46,186 2,522.7 54.69 32.38 53.62 1.86 212.11 30.05
CNBA Chester Bancorp of IL 15.00 2,182 32.7 15.37 12.62 15.13 -0.86 N.A. 14.33
CVAL Chester Valley Bancorp of PA 20.62 2,054 42.4 21.75 13.90 20.62 0.00 81.99 39.32
CTZN CitFed Bancorp of Dayton OH 41.12 8,613 354.2 42.00 24.50 42.00 -2.10 356.89 24.61
CLAS Classic Bancshares of KY 14.25 1,320 18.8 14.75 10.50 14.25 0.00 N.A. 22.63
CMSB Cmnwealth Bancorp of PA 16.12 17,096 275.6 16.62 10.00 16.25 -0.80 N.A. 7.47
COVB CoVest Bancshares of IL 21.81 3,018 65.8 19.00 16.25 21.25 2.64 227.48 26.43
CBSA Coastal Bancorp of Houston TX 30.12 4,972 149.8 30.87 16.50 30.87 -2.43 N.A. 31.70
CFCP Coastal Fin. Corp. of SC 26.00 4,637 120.6 27.00 13.22 25.37 2.48 160.00 65.08
COFD Collective Bancorp Inc. of NJ(8) 47.19 20,484 966.6 47.75 23.00 47.12 0.15 519.29 34.37
CMSV Commty. Svgs, MHC of FL (48.5) 22.87 4,921 54.1 23.12 15.75 23.12 -1.08 N.A. 11.56
CBNH Community Bankshares Inc of NH(8)* 39.75 2,465 98.0 40.25 18.00 39.75 0.00 960.00 93.90
CFTP Community Fed. Bancorp of MS 18.37 4,282 78.7 20.00 12.50 17.75 3.49 N.A. 8.06
CFFC Community Fin. Corp. of VA 22.75 1,275 29.0 23.50 20.50 22.75 0.00 225.00 9.64
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
ATSB AmTrust Capital Corp. of IN 0.40 0.26 13.73 13.58 135.04
AHCI Ambanc Holding Co., Inc. of NY* -0.65 -0.65 13.85 13.85 108.86
ASBI Ameriana Bancorp of IN 0.73 1.05 13.38 13.37 123.36
AFFFZ America First Fin. Fund of CA(8) 5.32 6.51 30.07 29.64 363.18
AMFB American Federal Bank of SC(8) 1.35 1.67 10.65 9.93 118.43
ANBK American Nat'l Bancorp of MD(8) 0.19 0.68 12.33 12.33 134.69
ABCW Anchor Bancorp Wisconsin of WI 3.04 3.97 25.73 25.23 411.48
ANDB Andover Bancorp, Inc. of MA* 2.52 2.60 18.96 18.96 235.06
ASFC Astoria Financial Corp. of NY 1.79 2.65 27.86 23.18 366.55
AVND Avondale Fin. Corp. of IL -1.22 -2.30 14.88 14.88 180.27
BKCT Bancorp Connecticut of CT* 2.01 1.92 16.81 16.81 161.61
BPLS Bank Plus Corp. of CA -0.63 -0.07 8.88 8.86 180.58
BWFC Bank West Fin. Corp. of MI 0.59 0.42 12.62 12.62 82.46
BANC BankAtlantic Bancorp of FL 1.15 0.88 8.49 6.91 154.25
BKUNA BankUnited SA of FL 0.21 0.41 7.33 5.89 164.25
BKCO Bankers Corp. of NJ(8)* 2.04 2.18 15.98 15.72 205.34
BVCC Bay View Capital Corp. of CA 0.94 1.59 14.80 14.07 234.58
BFSB Bedford Bancshares of VA 1.16 1.48 16.49 16.49 115.15
BFFC Big Foot Fin. Corp. of IL 0.04 0.35 14.34 14.34 84.46
BSBC Branford SB of CT* 0.31 0.30 2.58 2.58 27.05
BYFC Broadway Fin. Corp. of CA -0.31 0.16 14.26 14.26 131.13
CBCO CB Bancorp of Michigan City IN(8) 1.76 2.06 17.22 17.22 194.97
CBES CBES Bancorp of MO 0.69 0.86 17.08 17.08 92.90
CCFH CCF Holding Company of GA 0.25 0.41 14.39 14.39 100.51
CENF CENFED Financial Corp. of CA 1.84 2.70 20.06 20.02 392.95
CFSB CFSB Bancorp of Lansing MI 1.17 1.57 12.32 12.32 161.46
CKFB CKF Bancorp of Danville KY 0.84 0.83 15.38 15.38 64.94
CNSB CNS Bancorp of MO 0.31 0.47 14.73 14.73 59.35
CSBF CSB Financial Group Inc of IL* 0.25 0.38 13.57 12.80 53.10
CBCI Calumet Bancorp of Chicago IL 2.49 3.22 35.23 35.23 220.98
CAFI Camco Fin. Corp. of OH 0.94 1.11 14.24 13.10 146.95
CMRN Cameron Fin. Corp. of MO 0.77 0.96 16.92 16.92 73.71
CAPS Capital Savings Bancorp of MO 0.77 1.10 10.89 10.89 125.75
CFNC Carolina Fincorp of NC* 0.65 0.61 13.92 13.92 58.71
CNY Carver Bancorp, Inc. of NY -0.76 -0.05 14.76 14.13 183.02
CASB Cascade SB of Everett WA(8) 0.61 0.77 8.47 8.47 137.20
CATB Catskill Fin. Corp. of NY* 0.84 0.85 14.70 14.70 54.49
CNIT Cenit Bancorp of Norfolk VA 3.17 2.95 30.25 27.58 431.16
CEBK Central Co-Op. Bank of MA* 1.44 1.46 17.07 15.20 163.33
CENB Century Bancshares of NC* 4.31 4.36 73.51 73.51 245.57
CBSB Charter Financial Inc. of IL 0.84 1.06 13.22 11.60 93.56
COFI Charter One Financial of OH 2.89 3.67 20.60 19.16 304.00
CNBA Chester Bancorp of IL 0.71 0.71 14.50 14.50 65.30
CVAL Chester Valley Bancorp of PA 0.87 1.28 12.72 12.72 148.58
CTZN CitFed Bancorp of Dayton OH 1.76 2.55 21.59 19.23 341.03
CLAS Classic Bancshares of KY 0.45 0.62 14.67 12.38 99.66
CMSB Cmnwealth Bancorp of PA 0.67 0.85 12.51 9.61 130.79
COVB CoVest Bancshares of IL 0.31 0.85 16.36 15.59 183.09
CBSA Coastal Bancorp of Houston TX 1.49 2.49 19.63 16.58 573.77
CFCP Coastal Fin. Corp. of SC 0.89 0.98 6.37 6.37 104.51
COFD Collective Bancorp Inc. of NJ(8) 2.45 2.97 18.85 17.05 269.36
CMSV Commty. Svgs, MHC of FL (48.5) 0.83 1.26 15.57 15.57 138.65
CBNH Community Bankshares Inc of NH(8)* 2.08 1.68 16.80 16.80 235.56
CFTP Community Fed. Bancorp of MS 0.68 0.81 16.13 16.13 48.12
CFFC Community Fin. Corp. of VA 1.31 1.65 18.01 18.01 130.72
</TABLE>
<PAGE> 187
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CFBC Community First Bnkg Co. of GA 34.81 2,414 84.0 34.87 31.87 34.25 1.64 N.A. N.A.
CIBI Community Inv. Bancorp of OH 13.25 949 12.6 13.50 10.00 12.75 3.92 N.A. 16.95
COOP Cooperative Bk.for Svgs. of NC 26.00 1,492 38.8 27.00 16.50 27.00 -3.70 160.00 28.40
CRZY Crazy Woman Creek Bncorp of WY 14.12 955 13.5 14.25 10.12 14.12 0.00 N.A. 17.67
DNFC D&N Financial Corp. of MI 19.25 8,191 157.7 19.50 12.37 19.12 0.68 120.00 14.93
DFIN Damen Fin. Corp. of Chicago IL 14.13 3,247 45.9 15.00 11.00 14.37 -1.67 N.A. 9.79
DCBI Delphos Citizens Bancorp of OH 16.37 2,039 33.4 16.37 11.75 15.75 3.94 N.A. 36.42
DIME Dime Community Bancorp of NY 19.25 13,126 252.7 20.00 11.87 19.31 -0.31 N.A. 30.51
DIBK Dime Financial Corp. of CT* 26.25 5,136 134.8 27.00 14.50 27.00 -2.78 150.00 52.17
EGLB Eagle BancGroup of IL 16.62 1,268 21.1 16.62 10.87 16.00 3.88 N.A. 11.77
EBSI Eagle Bancshares of Tucker GA 18.25 4,552 83.1 18.50 13.62 18.00 1.39 151.72 17.74
EGFC Eagle Financial Corp. of CT 31.50 4,554 143.5 32.50 23.75 31.50 0.00 260.00 3.28
ETFS East Texas Fin. Serv. of TX 18.12 1,079 19.6 18.75 14.25 18.12 0.00 N.A. 10.69
EMLD Emerald Financial Corp of OH 14.37 5,062 72.7 15.00 10.37 14.37 0.00 N.A. 27.73
EIRE Emerald Island Bancorp, MA* 19.62 2,246 44.1 20.50 11.20 19.87 -1.26 157.48 22.63
EFBC Empire Federal Bancorp of MT 14.37 2,592 37.2 14.75 12.50 14.69 -2.18 N.A. N.A.
EFBI Enterprise Fed. Bancorp of OH 18.25 2,011 36.7 19.25 12.75 19.25 -5.19 N.A. 25.86
EQSB Equitable FSB of Wheaton MD 38.50 602 23.2 39.00 23.87 39.00 -1.28 N.A. 36.28
FFFG F.F.O. Financial Group of FL(8) 4.75 8,430 40.0 5.12 2.62 4.94 -3.85 -42.84 40.95
FCBF FCB Fin. Corp. of Neenah WI 27.00 2,464 66.5 27.50 17.00 26.75 0.93 N.A. 45.95
FFBS FFBS Bancorp of Columbus MS 26.00 1,557 40.5 26.00 19.75 26.00 0.00 N.A. 13.04
FFDF FFD Financial Corp. of OH 14.75 1,455 21.5 14.87 10.12 14.87 -0.81 N.A. 11.32
FFLC FFLC Bancorp of Leesburg FL 27.25 2,318 63.2 28.50 18.00 27.25 0.00 N.A. 26.74
FFFC FFVA Financial Corp. of VA 27.12 4,521 122.6 27.25 16.25 27.00 0.44 N.A. 32.29
FFWC FFW Corporation of Wabash IN 28.25 697 19.7 29.25 19.25 29.25 -3.42 N.A. 29.11
FFYF FFY Financial Corp. of OH 25.87 4,328 112.0 26.37 23.75 26.00 -0.50 N.A. 2.21
FMCO FMS Financial Corp. of NJ 28.50 2,388 68.1 28.50 15.50 24.50 16.33 216.67 56.16
FFHH FSF Financial Corp. of MN 17.62 3,095 54.5 18.25 11.37 18.00 -2.11 N.A. 16.53
FOBC Fed One Bancorp of Wheeling WV 21.25 2,373 50.4 21.25 13.25 21.25 0.00 112.50 34.92
FBCI Fidelity Bancorp of Chicago IL 20.12 2,792 56.2 20.87 15.50 19.37 3.87 N.A. 18.35
FSBI Fidelity Bancorp, Inc. of PA 20.00 1,541 30.8 21.70 14.54 20.00 0.00 158.73 10.01
FFFL Fidelity FSB, MHC of FL (47.4) 21.50 6,766 68.5 21.50 12.25 20.75 3.61 N.A. 21.13
FFED Fidelity Fed. Bancorp of IN 8.75 2,490 21.8 11.75 7.50 9.12 -4.06 24.11 -10.26
FFOH Fidelity Financial of OH 15.00 5,594 83.9 15.25 9.62 14.62 2.60 N.A. 30.43
FIBC Financial Bancorp, Inc. of NY 18.75 1,748 32.8 19.50 12.75 19.37 -3.20 N.A. 25.00
FBSI First Bancshares of MO 23.50 1,160 27.3 25.25 15.00 22.25 5.62 84.31 41.40
FBBC First Bell Bancorp of PA 16.75 6,803 114.0 17.37 13.12 16.37 2.32 N.A. 26.42
FBER First Bergen Bancorp of NJ 16.00 3,015 48.2 16.25 9.12 15.75 1.59 N.A. 39.13
SKBO First Carnegie,MHC of PA(45.0) 14.00 2,300 14.5 14.75 11.62 14.12 -0.85 N.A. N.A.
FCIT First Cit. Fin. Corp of MD(8) 33.12 2,944 97.5 33.12 16.00 32.50 1.91 281.13 81.48
FSTC First Citizens Corp of GA 28.75 1,829 52.6 28.75 19.00 28.75 0.00 130.00 13.86
FFBA First Colorado Bancorp of Co 19.37 16,555 320.7 20.12 13.25 19.00 1.95 486.97 13.94
FDEF First Defiance Fin.Corp. of OH 14.87 9,424 140.1 15.12 9.87 15.00 -0.87 N.A. 20.21
FESX First Essex Bancorp of MA* 17.62 7,484 131.9 18.25 10.25 18.25 -3.45 193.67 34.30
FFES First FS&LA of E. Hartford CT 29.00 2,649 76.8 30.37 17.00 29.25 -0.85 346.15 26.09
FFSX First FS&LA. MHC of IA (46.0) 22.50 2,827 19.5 35.00 20.75 23.75 -5.26 237.33 15.38
FFSW First Fed Fin. Serv. of OH 41.00 4,588 188.1 42.00 22.60 41.00 0.00 201.47 31.83
BDJI First Fed. Bancorp. of MN 20.75 701 14.5 20.75 12.50 20.12 3.13 N.A. 12.16
FFBH First Fed. Bancshares of AR 21.25 4,896 104.0 21.62 12.87 20.62 3.06 N.A. 33.90
FTFC First Fed. Capital Corp. of WI 23.06 9,134 210.6 24.50 13.00 23.37 -1.33 207.47 47.16
FFKY First Fed. Fin. Corp. of KY 21.50 4,165 89.5 23.00 17.75 21.50 0.00 36.51 6.17
FFBZ First Federal Bancorp of OH 18.50 1,572 29.1 19.00 11.75 17.00 8.82 85.00 15.63
FFCH First Fin. Holdings Inc. of SC 31.00 6,326 196.1 34.50 17.50 32.25 -3.88 153.06 37.78
FFBI First Financial Bancorp of IL 18.37 415 7.6 18.75 15.50 18.75 -2.03 N.A. 15.75
FFHC First Financial Corp. of WI(8) 29.50 36,209 1,068.2 29.87 17.40 29.50 0.00 87.30 20.41
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
CFBC Community First Bnkg Co. of GA 0.42 0.82 27.66 27.66 168.47
CIBI Community Inv. Bancorp of OH 0.66 0.98 11.82 11.82 102.68
COOP Cooperative Bk.for Svgs. of NC -1.96 0.29 17.49 17.49 233.58
CRZY Crazy Woman Creek Bncorp of WY 0.54 0.68 15.17 15.17 54.49
DNFC D&N Financial Corp. of MI 1.07 1.45 10.84 10.72 186.60
DFIN Damen Fin. Corp. of Chicago IL 0.51 0.64 14.12 14.12 70.03
DCBI Delphos Citizens Bancorp of OH 0.62 0.62 14.88 14.88 52.51
DIME Dime Community Bancorp of NY 0.87 0.97 14.53 12.47 94.26
DIBK Dime Financial Corp. of CT* 2.61 2.69 12.41 11.96 158.57
EGLB Eagle BancGroup of IL -0.26 0.15 16.27 16.27 134.49
EBSI Eagle Bancshares of Tucker GA 0.80 1.09 12.74 12.74 146.35
EGFC Eagle Financial Corp. of CT 1.85 2.47 22.91 17.24 332.02
ETFS East Texas Fin. Serv. of TX 0.34 0.68 19.69 19.69 103.51
EMLD Emerald Financial Corp of OH 0.75 0.96 8.73 8.58 116.28
EIRE Emerald Island Bancorp, MA* 1.40 1.48 12.77 12.77 183.50
EFBC Empire Federal Bancorp of MT 0.35 0.46 14.76 14.76 42.30
EFBI Enterprise Fed. Bancorp of OH 0.75 0.82 15.52 15.50 122.52
EQSB Equitable FSB of Wheaton MD 2.20 3.52 24.92 24.92 491.70
FFFG F.F.O. Financial Group of FL(8) 0.19 0.31 2.41 2.41 37.60
FCBF FCB Fin. Corp. of Neenah WI 0.99 1.17 19.25 19.25 110.06
FFBS FFBS Bancorp of Columbus MS 0.96 1.21 16.05 16.05 82.64
FFDF FFD Financial Corp. of OH 0.44 0.61 14.50 14.50 58.62
FFLC FFLC Bancorp of Leesburg FL 1.01 1.48 22.39 22.39 154.68
FFFC FFVA Financial Corp. of VA 1.27 1.57 15.78 15.43 121.60
FFWC FFW Corporation of Wabash IN 1.98 2.46 22.75 22.75 227.32
FFYF FFY Financial Corp. of OH 1.20 1.72 19.50 19.50 138.32
FMCO FMS Financial Corp. of NJ 1.41 2.15 14.58 14.28 231.83
FFHH FSF Financial Corp. of MN 0.72 0.93 13.97 13.97 118.68
FOBC Fed One Bancorp of Wheeling WV 0.99 1.41 16.94 16.14 145.90
FBCI Fidelity Bancorp of Chicago IL 0.88 1.26 17.74 17.69 174.07
FSBI Fidelity Bancorp, Inc. of PA 1.07 1.70 14.81 14.81 212.78
FFFL Fidelity FSB, MHC of FL (47.4) 0.49 0.78 12.08 11.98 136.99
FFED Fidelity Fed. Bancorp of IN 0.17 0.30 5.17 5.17 100.52
FFOH Fidelity Financial of OH 0.40 0.64 12.03 10.57 91.72
FIBC Financial Bancorp, Inc. of NY 0.77 1.42 14.98 14.91 154.00
FBSI First Bancshares of MO 1.18 1.45 19.80 19.77 137.97
FBBC First Bell Bancorp of PA 1.07 1.26 10.63 10.63 104.22
FBER First Bergen Bancorp of NJ 0.35 0.63 13.76 13.76 83.68
SKBO First Carnegie,MHC of PA(45.0) 0.24 0.35 10.21 10.21 65.23
FCIT First Cit. Fin. Corp of MD(8) 1.19 1.79 14.39 14.39 235.67
FSTC First Citizens Corp of GA 2.52 2.11 13.18 10.37 140.67
FFBA First Colorado Bancorp of Co 1.03 1.02 13.08 12.92 91.46
FDEF First Defiance Fin.Corp. of OH 0.44 0.60 12.41 12.41 57.94
FESX First Essex Bancorp of MA* 1.27 1.11 11.20 9.65 153.24
FFES First FS&LA of E. Hartford CT 1.56 2.49 23.00 23.00 367.95
FFSX First FS&LA. MHC of IA (46.0) 0.68 1.17 13.32 13.20 163.72
FFSW First Fed Fin. Serv. of OH 2.01 1.59 14.35 12.12 237.17
BDJI First Fed. Bancorp. of MN 0.48 1.00 17.17 17.17 153.66
FFBH First Fed. Bancshares of AR 0.81 1.16 16.79 16.79 106.16
FTFC First Fed. Capital Corp. of WI 1.18 1.37 10.65 9.98 167.53
FFKY First Fed. Fin. Corp. of KY 1.08 1.29 12.16 11.42 89.39
FFBZ First Federal Bancorp of OH 0.86 1.18 9.34 9.33 121.94
FFCH First Fin. Holdings Inc. of SC 1.35 2.05 15.57 15.57 253.24
FFBI First Financial Bancorp of IL -0.05 1.05 17.52 17.52 224.47
FFHC First Financial Corp. of WI(8) 1.44 1.96 11.20 10.88 160.42
</TABLE>
<PAGE> 188
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFHS First Franklin Corp. of OH 20.00 1,178 23.6 20.75 14.25 20.00 0.00 52.44 21.21
FGHC First Georgia Hold. Corp of GA 7.00 3,052 21.4 8.25 4.00 7.75 -9.68 82.77 23.46
FSPG First Home Bancorp of NJ 20.12 2,708 54.5 20.12 13.31 20.00 0.60 235.33 45.06
FFSL First Independence Corp. of KS 11.62 1,005 11.7 12.25 8.87 11.62 0.00 N.A. 12.05
FISB First Indiana Corp. of IN 22.50 10,505 236.4 24.30 17.00 22.50 0.00 66.67 5.14
FKFS First Keystone Fin. Corp of PA 24.00 1,228 29.5 24.12 16.75 23.25 3.23 N.A. 24.68
FLKY First Lancaster Bncshrs of KY 15.25 959 14.6 16.25 13.37 15.37 -0.78 N.A. 4.31
FLFC First Liberty Fin. Corp. of GA 23.37 7,725 180.5 23.37 13.67 23.12 1.08 360.04 27.22
CASH First Midwest Fin. Corp. of IA 16.25 2,827 45.9 17.87 14.50 17.87 -9.07 N.A. 6.00
FMBD First Mutual Bancorp of IL 15.63 3,742 58.5 16.00 11.69 15.75 -0.76 N.A. 4.20
FMSB First Mutual SB of Bellevue WA* 20.62 2,699 55.7 21.50 11.14 20.00 3.10 166.06 29.60
FNGB First Northern Cap. Corp of WI 25.00 4,419 110.5 25.00 15.25 22.12 13.02 71.70 53.85
FFPB First Palm Beach Bancorp of FL 31.25 5,009 156.5 34.00 20.25 32.00 -2.34 N.A. 32.30
FSLA First SB SLA MHC of NJ (47.5) 27.50 7,247 93.6 29.50 14.09 28.00 -1.79 175.00 48.65
FSNJ First SB of NJ, MHC (45.9)(8) 33.50 3,064 47.1 33.50 14.00 30.75 8.94 N.A. 45.65
SOPN First SB, SSB, Moore Co. of NC 22.25 3,697 82.3 24.00 16.75 23.50 -5.32 N.A. 18.67
FWWB First Savings Bancorp of WA* 23.50 10,519 247.2 23.50 14.62 22.12 6.24 N.A. 27.93
SHEN First Shenango Bancorp of PA 27.75 2,063 57.2 27.75 20.00 26.25 5.71 N.A. 23.33
FSFC First So.east Fin. Corp. of SC(8) 14.50 4,388 63.6 14.50 9.12 14.00 3.57 N.A. 54.58
FBNW FirstBank Corp of Clarkston WA 17.25 1,984 34.2 17.25 15.50 15.50 11.29 N.A. N.A.
FSPT FirstSpartan Fin. Corp. of SC 36.62 4,430 162.2 37.00 36.50 36.87 -0.68 N.A. N.A.
FLAG Flag Financial Corp of GA 14.37 2,037 29.3 14.62 9.75 14.31 0.42 46.63 33.67
FFIC Flushing Fin. Corp. of NY* 20.25 8,088 163.8 23.50 16.94 20.87 -2.97 N.A. 11.75
FBHC Fort Bend Holding Corp. of TX 29.50 822 24.2 31.00 16.87 29.50 0.00 N.A. 15.69
FTSB Fort Thomas Fin. Corp. of KY 11.00 1,495 16.4 17.75 9.25 10.50 4.76 N.A. -24.76
FKKY Frankfort First Bancorp of KY 9.00 3,385 30.5 12.25 8.00 9.06 -0.66 N.A. -20.84
FTNB Fulton Bancorp of MO 19.87 1,719 34.2 20.37 12.50 19.75 0.61 N.A. 29.28
GFSB GFS Bancorp of Grinnell IA 13.37 988 13.2 14.25 10.12 13.87 -3.60 N.A. 25.89
GUPB GFSB Bancorp of Gallup NM 19.75 839 16.6 19.75 13.25 19.00 3.95 N.A. 24.45
GSLA GS Financial Corp. of LA 15.44 3,439 53.1 15.63 13.37 14.87 3.83 N.A. N.A.
GOSB GSB Financial Corp. of NY 14.75 2,248 33.2 14.87 14.62 14.62 0.89 N.A. N.A.
GWBC Gateway Bancorp of KY(8) 17.87 1,076 19.2 18.25 13.00 17.75 0.68 N.A. 25.40
GBCI Glacier Bancorp of MT 19.00 6,799 129.2 20.25 13.50 18.00 5.56 293.37 16.35
GLBK Glendale Co-op. Bank of MA(8)* 27.00 247 6.7 27.00 16.50 27.00 0.00 N.A. 35.00
GFCO Glenway Financial Corp. of OH 26.00 1,144 29.7 26.50 18.09 26.50 -1.89 N.A. 26.83
GTPS Great American Bancorp of IL 16.87 1,760 29.7 17.25 13.25 17.25 -2.20 N.A. 13.91
GTFN Great Financial Corp. of KY 34.09 14,073 479.7 35.12 25.37 33.75 1.01 N.A. 17.07
GSBC Great Southern Bancorp of MO 16.87 8,288 139.8 18.00 13.50 16.37 3.05 477.74 -5.28
GDVS Greater DV SB,MHC of PA (19.9)* 16.00 3,272 10.4 16.50 9.25 16.50 -3.03 N.A. 54.29
GSFC Green Street Fin. Corp. of NC 17.87 4,298 76.8 18.87 12.50 17.62 1.42 N.A. 15.29
GSLC Guaranty Svgs & Loan FA of VA 11.94 1,499 17.9 11.00 7.25 11.50 3.83 N.A. 36.46
GFED Guarnty FS&LA,MHC of MO (31.0)(8) 18.00 3,125 17.4 20.50 9.75 17.75 1.41 N.A. 49.25
HCBB HCB Bancshares of AR 13.87 2,645 36.7 13.87 12.62 13.87 0.00 N.A. N.A.
HEMT HF Bancorp of Hemet CA 14.00 6,282 87.9 14.75 9.25 13.87 0.94 N.A. 25.90
HFFC HF Financial Corp. of SD 21.50 2,998 64.5 21.88 14.75 21.50 0.00 330.00 24.21
HFNC HFNC Financial Corp. of NC 16.25 17,192 279.4 22.06 14.87 15.37 5.73 N.A. -9.07
HMNF HMN Financial, Inc. of MN 23.12 4,210 97.3 24.00 15.12 23.00 0.52 N.A. 27.59
HALL Hallmark Capital Corp. of WI 22.50 1,443 32.5 22.50 14.50 21.75 3.45 N.A. 26.76
HARB Harbor FSB, MHC of FL (46.0) 43.50 4,962 98.7 45.75 23.75 45.00 -3.33 N.A. 21.68
HRBF Harbor Federal Bancorp of MD 19.00 1,754 33.3 19.75 12.37 19.75 -3.80 90.00 20.63
HFSA Hardin Bancorp of Hardin MO 16.25 859 14.0 16.25 11.25 15.25 6.56 N.A. 30.00
HARL Harleysville SA of PA 24.50 1,652 40.5 24.50 14.00 24.00 2.08 38.03 55.06
HARS Harris SB, MHC of PA (24.2) 23.50 11,221 63.8 23.50 14.75 22.12 6.24 N.A. 28.77
HFFB Harrodsburg 1st Fin Bcrp of KY 15.50 2,025 31.4 19.00 14.75 15.50 0.00 N.A. -17.86
HHFC Harvest Home Fin. Corp. of OH 11.75 935 11.0 13.75 9.25 12.00 -2.08 N.A. 20.51
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFHS First Franklin Corp. of OH 0.27 1.15 16.93 16.81 192.05
FGHC First Georgia Hold. Corp of GA 0.47 0.28 4.09 3.73 48.20
FSPG First Home Bancorp of NJ 1.63 2.14 12.36 12.14 187.68
FFSL First Independence Corp. of KS 0.53 0.81 11.42 11.42 108.69
FISB First Indiana Corp. of IN 1.26 1.45 13.51 13.34 141.00
FKFS First Keystone Fin. Corp of PA 1.24 1.84 18.12 18.12 256.22
FLKY First Lancaster Bncshrs of KY 0.46 0.56 14.44 14.44 42.18
FLFC First Liberty Fin. Corp. of GA 1.76 1.42 11.87 10.62 161.56
CASH First Midwest Fin. Corp. of IA 0.96 1.24 15.18 13.43 130.94
FMBD First Mutual Bancorp of IL 0.13 0.34 15.22 11.71 113.47
FMSB First Mutual SB of Bellevue WA* 1.45 1.40 10.15 10.15 154.44
FNGB First Northern Cap. Corp of WI 0.81 1.20 16.09 16.09 139.83
FFPB First Palm Beach Bancorp of FL -0.02 0.15 21.04 20.50 311.09
FSLA First SB SLA MHC of NJ (47.5) 0.69 1.22 13.00 11.52 141.40
FSNJ First SB of NJ, MHC (45.9)(8) -0.70 0.47 16.18 16.18 188.83
SOPN First SB, SSB, Moore Co. of NC 0.99 1.19 18.04 18.04 73.34
FWWB First Savings Bancorp of WA* 0.81 0.77 14.06 14.06 92.89
SHEN First Shenango Bancorp of PA 1.55 2.08 20.79 20.79 194.34
FSFC First So.east Fin. Corp. of SC(8) 0.01 0.70 7.80 7.80 76.29
FBNW FirstBank Corp of Clarkston WA 0.54 0.44 14.00 14.00 77.62
FSPT FirstSpartan Fin. Corp. of SC 1.00 1.16 27.63 27.63 104.97
FLAG Flag Financial Corp of GA -0.07 0.15 10.25 10.25 109.02
FFIC Flushing Fin. Corp. of NY* 0.86 0.89 16.06 16.06 100.30
FBHC Fort Bend Holding Corp. of TX 0.74 1.72 21.78 20.15 338.85
FTSB Fort Thomas Fin. Corp. of KY 0.30 0.46 10.19 10.19 63.33
FKKY Frankfort First Bancorp of KY 0.24 0.36 9.93 9.93 37.91
FTNB Fulton Bancorp of MO 0.41 0.58 14.47 14.47 57.86
GFSB GFS Bancorp of Grinnell IA 0.85 1.09 10.32 10.32 89.22
GUPB GFSB Bancorp of Gallup NM 0.69 0.87 16.88 16.88 103.59
GSLA GS Financial Corp. of LA 0.29 0.29 15.77 15.77 34.03
GOSB GSB Financial Corp. of NY 0.52 0.44 13.78 13.78 50.92
GWBC Gateway Bancorp of KY(8) 0.53 0.74 15.95 15.95 61.16
GBCI Glacier Bancorp of MT 1.00 1.13 7.77 7.55 81.24
GLBK Glendale Co-op. Bank of MA(8)* 1.11 1.07 24.48 24.48 149.50
GFCO Glenway Financial Corp. of OH 0.92 1.67 23.46 23.10 245.47
GTPS Great American Bancorp of IL 0.33 0.42 16.58 16.58 78.35
GTFN Great Financial Corp. of KY 1.46 1.40 19.83 18.97 213.33
GSBC Great Southern Bancorp of MO 1.09 1.23 7.35 7.35 81.94
GDVS Greater DV SB,MHC of PA (19.9)* 0.01 0.24 8.37 8.37 72.95
GSFC Green Street Fin. Corp. of NC 0.57 0.70 14.64 14.64 40.57
GSLC Guaranty Svgs & Loan FA of VA 0.33 0.31 4.43 4.43 77.50
GFED Guarnty FS&LA,MHC of MO (31.0)(8) 0.30 0.49 8.68 8.68 62.73
HCBB HCB Bancshares of AR -0.08 0.29 13.73 13.16 75.24
HEMT HF Bancorp of Hemet CA -0.36 -2.62 12.91 0.00 131.63
HFFC HF Financial Corp. of SD 1.10 1.51 17.21 17.17 187.22
HFNC HFNC Financial Corp. of NC 0.51 0.67 9.23 9.23 49.03
HMNF HMN Financial, Inc. of MN 0.99 1.20 18.71 18.71 131.36
HALL Hallmark Capital Corp. of WI 1.20 1.58 19.82 19.82 283.64
HARB Harbor FSB, MHC of FL (46.0) 1.93 2.54 18.30 17.61 222.68
HRBF Harbor Federal Bancorp of MD 0.51 0.82 16.09 16.09 125.12
HFSA Hardin Bancorp of Hardin MO 0.54 0.88 15.38 15.38 120.32
HARL Harleysville SA of PA 1.30 1.86 12.81 12.81 201.31
HARS Harris SB, MHC of PA (24.2) 0.36 0.88 13.71 11.83 173.19
HFFB Harrodsburg 1st Fin Bcrp of KY 0.55 0.73 14.08 14.08 53.43
HHFC Harvest Home Fin. Corp. of OH 0.17 0.44 11.12 11.12 89.47
</TABLE>
<PAGE> 189
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HAVN Haven Bancorp of Woodhaven NY 37.25 4,330 161.3 38.37 25.56 37.62 -0.98 N.A. 30.15
HVFD Haverfield Corp. of OH(8) 26.00 1,906 49.6 26.75 17.00 26.00 0.00 67.74 35.98
HTHR Hawthorne Fin. Corp. of CA 13.00 2,629 34.2 13.00 6.62 12.62 3.01 -52.73 59.90
HMLK Hemlock Fed. Fin. Corp. of IL 15.25 2,076 31.7 15.25 12.50 15.12 0.86 N.A. N.A.
HBNK Highland Federal Bank of CA 25.00 2,300 57.5 25.75 14.25 25.00 0.00 N.A. 47.06
HIFS Hingham Inst. for Sav. of MA* 23.25 1,301 30.2 23.25 14.00 22.25 4.49 409.87 24.00
HBEI Home Bancorp of Elgin IL 18.25 7,009 127.9 19.31 11.81 18.87 -3.29 N.A. 35.19
HBFW Home Bancorp of Fort Wayne IN 20.87 2,623 54.7 21.25 14.75 21.06 -0.90 N.A. 9.84
HBBI Home Building Bancorp of IN 22.00 312 6.9 22.00 17.00 22.00 0.00 N.A. 11.39
HCFC Home City Fin. Corp. of OH 14.75 952 14.0 14.75 12.00 14.62 0.89 N.A. 11.32
HOMF Home Fed Bancorp of Seymour IN 29.50 3,390 100.0 30.50 17.33 30.50 -3.28 193.53 14.56
HWEN Home Financial Bancorp of IN 15.00 486 7.3 15.75 10.50 15.00 0.00 N.A. 17.65
HPBC Home Port Bancorp, Inc. of MA* 20.25 1,842 37.3 20.50 13.25 20.50 -1.22 153.13 22.73
HMCI Homecorp, Inc. of Rockford IL 14.00 1,693 23.7 15.17 11.42 14.00 0.00 40.00 9.80
HZFS Horizon Fin'l. Services of IA 19.00 426 8.1 19.50 14.00 19.00 0.00 N.A. 25.66
HRZB Horizon Financial Corp. of WA* 15.87 7,399 117.4 16.50 10.65 16.50 -3.82 38.97 35.18
IBSF IBS Financial Corp. of NJ 18.25 11,012 201.0 18.75 11.20 18.62 -1.99 N.A. 34.29
ISBF ISB Financial Corp. of LA 25.87 7,001 181.1 26.12 14.12 24.00 7.79 N.A. 43.72
ITLA Imperial Thrift & Loan of CA* 17.50 7,829 137.0 17.62 12.62 17.50 0.00 N.A. 16.67
IFSB Independence FSB of DC 12.37 1,280 15.8 12.37 6.75 9.62 28.59 518.50 54.62
INCB Indiana Comm. Bank, SB of IN 16.25 922 15.0 19.00 13.25 15.12 7.47 N.A. 0.00
IFSL Indiana Federal Corp. of IN(8) 29.25 4,786 140.0 29.25 18.25 28.75 1.74 287.93 30.76
INBI Industrial Bancorp of OH 13.75 5,410 74.4 14.25 9.87 13.75 0.00 N.A. 7.84
IWBK Interwest SB of Oak Harbor WA 39.00 8,036 313.4 39.50 24.25 39.00 0.00 290.00 20.93
IPSW Ipswich SB of Ipswich MA* 19.50 1,188 23.2 19.50 9.75 16.50 18.18 N.A. 62.50
JSBF JSB Financial, Inc. of NY 44.00 9,830 432.5 46.50 32.87 44.50 -1.12 282.61 15.79
JXVL Jacksonville Bancorp of TX 15.25 2,572 39.2 15.75 10.00 15.12 0.86 N.A. 4.31
JXSB Jcksnville SB,MHC of IL (44.6) 16.75 1,272 9.5 18.00 11.50 16.75 0.00 N.A. 26.42
JSBA Jefferson Svgs Bancorp of MO 29.00 4,971 144.2 30.62 22.25 30.00 -3.33 N.A. 11.54
JOAC Joachim Bancorp of MO 14.25 760 10.8 15.25 12.37 14.50 -1.72 N.A. -1.72
KSAV KS Bancorp of Kenly NC 18.50 884 16.4 19.12 13.59 19.12 -3.24 N.A. 24.08
KSBK KSB Bancorp of Kingfield ME(8)* 15.50 1,238 19.2 16.00 6.82 15.50 0.00 N.A. 102.09
KFBI Klamath First Bancorp of OR 19.12 9,962 190.5 20.12 13.37 19.50 -1.95 N.A. 21.40
LSBI LSB Fin. Corp. of Lafayette IN 21.00 945 19.8 21.00 14.29 20.25 3.70 N.A. 13.09
LVSB Lakeview SB of Paterson NJ 33.50 2,302 77.1 33.87 17.95 33.00 1.52 N.A. 34.70
LARK Landmark Bancshares of KS 20.50 1,808 37.1 20.50 15.25 20.25 1.23 N.A. 13.89
LARL Laurel Capital Group of PA 21.12 1,498 31.6 22.50 14.50 21.44 -1.49 65.00 28.00
LSBX Lawrence Savings Bank of MA* 12.62 4,274 53.9 12.87 5.25 12.87 -1.94 266.86 55.23
LFED Leeds FSB, MHC of MD (36.2) 20.25 3,455 25.3 20.25 13.00 19.50 3.85 N.A. 26.56
LXMO Lexington B&L Fin. Corp. of MO 15.75 1,088 17.1 16.62 9.75 16.12 -2.30 N.A. 16.67
LIFB Life Bancorp of Norfolk VA 24.25 9,847 238.8 26.62 14.12 25.75 -5.83 N.A. 34.72
LFBI Little Falls Bancorp of NJ 16.50 2,745 45.3 16.50 10.25 15.37 7.35 N.A. 29.41
LOGN Logansport Fin. Corp. of IN 13.62 1,256 17.1 15.00 11.12 13.25 2.79 N.A. 21.07
LONF London Financial Corp. of OH 15.00 515 7.7 17.50 10.00 14.75 1.69 N.A. 6.23
LISB Long Island Bancorp, Inc of NY 35.19 24,228 852.6 39.25 27.69 35.37 -0.51 N.A. 0.54
MAFB MAF Bancorp of IL 31.62 15,644 494.7 32.50 15.17 29.12 8.59 272.00 36.47
MBLF MBLA Financial Corp. of MO 23.50 1,316 30.9 24.75 19.00 23.50 0.00 N.A. 23.68
MFBC MFB Corp. of Mishawaka IN 19.62 1,735 34.0 19.75 14.00 19.75 -0.66 N.A. 18.05
MLBC ML Bancorp of Villanova PA 19.25 10,415 200.5 20.25 11.87 19.00 1.32 N.A. 36.33
MBB MSB Bancorp of Middletown NY* 22.25 2,837 63.1 22.69 15.50 21.00 5.95 122.50 13.40
MSBF MSB Financial Corp. of MI 29.50 630 18.6 29.50 16.75 27.50 7.27 N.A. 55.26
MGNL Magna Bancorp of MS(8) 26.00 13,754 357.6 27.37 16.75 26.50 -1.89 420.00 48.57
MARN Marion Capital Holdings of IN 23.44 1,828 42.8 23.50 19.25 23.25 0.82 N.A. 21.77
MRKF Market Fin. Corp. of OH 14.25 1,336 19.0 14.25 12.25 13.75 3.64 N.A. N.A.
MFCX Marshalltown Fin. Corp. of IA(8) 16.87 1,411 23.8 16.87 14.25 16.81 0.36 N.A. 13.45
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HAVN Haven Bancorp of Woodhaven NY 2.28 3.32 23.13 23.04 399.03
HVFD Haverfield Corp. of OH(8) 0.88 1.86 15.04 15.04 179.26
HTHR Hawthorne Fin. Corp. of CA 2.39 1.65 12.37 12.37 318.74
HMLK Hemlock Fed. Fin. Corp. of IL -0.29 0.37 14.49 14.49 79.24
HBNK Highland Federal Bank of CA 0.59 1.02 15.58 15.58 208.78
HIFS Hingham Inst. for Sav. of MA* 1.73 1.73 15.10 15.10 158.08
HBEI Home Bancorp of Elgin IL 0.15 0.39 14.39 14.39 51.18
HBFW Home Bancorp of Fort Wayne IN 0.68 1.10 17.43 17.43 124.97
HBBI Home Building Bancorp of IN 0.27 0.74 18.11 18.11 150.01
HCFC Home City Fin. Corp. of OH 0.51 0.77 14.77 14.77 71.68
HOMF Home Fed Bancorp of Seymour IN 1.93 2.29 16.54 16.00 195.77
HWEN Home Financial Bancorp of IN 0.45 0.64 15.12 15.12 81.16
HPBC Home Port Bancorp, Inc. of MA* 1.69 1.68 11.11 11.11 102.72
HMCI Homecorp, Inc. of Rockford IL 0.23 0.77 12.52 12.52 198.73
HZFS Horizon Fin'l. Services of IA 0.75 1.05 19.31 19.31 183.96
HRZB Horizon Financial Corp. of WA* 1.05 1.03 10.61 10.61 69.65
IBSF IBS Financial Corp. of NJ 0.35 0.60 11.45 11.45 67.20
ISBF ISB Financial Corp. of LA 0.75 1.01 16.28 13.74 132.73
ITLA Imperial Thrift & Loan of CA* 1.37 1.37 11.77 11.72 103.52
IFSB Independence FSB of DC 0.29 0.66 13.39 11.74 205.28
INCB Indiana Comm. Bank, SB of IN 0.16 0.50 12.27 12.27 99.06
IFSL Indiana Federal Corp. of IN(8) 1.10 1.56 15.03 14.12 171.11
INBI Industrial Bancorp of OH 0.44 0.86 11.41 11.41 61.71
IWBK Interwest SB of Oak Harbor WA 1.67 2.34 14.78 14.44 220.45
IPSW Ipswich SB of Ipswich MA* 1.53 1.20 8.59 8.59 139.32
JSBF JSB Financial, Inc. of NY 2.76 2.62 34.52 34.52 155.74
JXVL Jacksonville Bancorp of TX 0.74 1.02 13.27 13.27 84.89
JXSB Jcksnville SB,MHC of IL (44.6) 0.33 0.77 13.26 13.26 128.80
JSBA Jefferson Svgs Bancorp of MO 0.57 1.43 18.09 14.12 230.96
JOAC Joachim Bancorp of MO 0.24 0.37 13.60 13.60 46.92
KSAV KS Bancorp of Kenly NC 1.01 1.32 15.76 15.75 113.98
KSBK KSB Bancorp of Kingfield ME(8)* 2.75 2.74 21.90 20.27 320.90
KFBI Klamath First Bancorp of OR 0.59 0.87 14.03 14.03 68.64
LSBI LSB Fin. Corp. of Lafayette IN 0.94 0.79 18.06 18.06 198.97
LVSB Lakeview SB of Paterson NJ 2.78 1.93 19.91 15.92 209.23
LARK Landmark Bancshares of KS 0.98 1.22 18.11 18.11 123.78
LARL Laurel Capital Group of PA 1.50 1.92 14.51 14.51 139.24
LSBX Lawrence Savings Bank of MA* 1.30 1.29 7.03 7.03 80.03
LFED Leeds FSB, MHC of MD (36.2) 0.63 0.90 13.20 13.20 81.59
LXMO Lexington B&L Fin. Corp. of MO 0.42 0.58 15.17 15.17 54.92
LIFB Life Bancorp of Norfolk VA 0.96 1.18 15.42 14.94 142.97
LFBI Little Falls Bancorp of NJ 0.27 0.53 14.30 13.16 110.52
LOGN Logansport Fin. Corp. of IN 0.73 0.95 12.41 12.41 63.14
LONF London Financial Corp. of OH 0.54 0.79 14.63 14.63 73.66
LISB Long Island Bancorp, Inc of NY 1.38 1.64 21.62 21.41 239.98
MAFB MAF Bancorp of IL 1.49 2.07 16.31 14.16 206.88
MBLF MBLA Financial Corp. of MO 1.05 1.36 21.51 21.51 159.41
MFBC MFB Corp. of Mishawaka IN 0.71 1.07 19.59 19.59 135.04
MLBC ML Bancorp of Villanova PA 1.26 1.15 13.55 13.22 180.04
MBB MSB Bancorp of Middletown NY* 0.44 0.48 19.72 8.48 285.75
MSBF MSB Financial Corp. of MI 1.22 1.52 19.94 19.94 120.05
MGNL Magna Bancorp of MS(8) 1.33 1.57 9.62 9.30 100.56
MARN Marion Capital Holdings of IN 1.27 1.53 21.99 21.99 95.41
MRKF Market Fin. Corp. of OH 0.38 0.50 14.17 14.17 42.68
MFCX Marshalltown Fin. Corp. of IA(8) 0.30 0.63 14.06 14.06 90.08
</TABLE>
<PAGE> 190
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MFSL Maryland Fed. Bancorp of MD 44.50 3,210 142.8 45.50 27.14 44.75 -0.56 323.81 28.06
MASB MassBank Corp. of Reading MA* 51.50 2,681 138.1 51.50 32.50 48.00 7.29 317.68 35.10
MFLR Mayflower Co-Op. Bank of MA* 19.00 890 16.9 19.75 13.12 19.50 -2.56 280.00 11.76
MECH Mechanics SB of Hartford CT* 20.00 5,290 105.8 20.25 11.12 19.37 3.25 N.A. 26.98
MDBK Medford Savings Bank of MA* 30.75 4,541 139.6 32.00 21.25 30.75 0.00 339.29 19.42
MERI Meritrust FSB of Thibodaux LA 41.00 774 31.7 41.50 30.75 39.75 3.14 N.A. 29.66
MWBX Metro West of MA* 5.69 13,953 79.4 6.00 3.62 6.00 -5.17 38.11 5.96
MCBS Mid Continent Bancshares of KS 30.87 1,958 60.4 31.75 17.50 29.50 4.64 N.A. 32.09
MIFC Mid Iowa Financial Corp. of IA 8.50 1,676 14.2 9.00 6.00 8.75 -2.86 70.00 33.44
MCBN Mid-Coast Bancorp of ME 21.25 231 4.9 21.25 18.00 19.50 8.97 272.15 11.84
MWBI Midwest Bancshares, Inc. of IA 34.50 348 12.0 34.50 24.50 32.75 5.34 245.00 30.19
MWFD Midwest Fed. Fin. Corp of WI 19.75 1,625 32.1 24.50 15.25 20.25 -2.47 295.00 6.76
MFFC Milton Fed. Fin. Corp. of OH 13.75 2,327 32.0 16.00 11.50 13.62 0.95 N.A. -5.17
MIVI Miss. View Hold. Co. of MN 15.25 819 12.5 15.63 10.87 15.25 0.00 N.A. 27.08
MBSP Mitchell Bancorp of NC* 16.50 968 16.0 16.75 10.19 16.37 0.79 N.A. 15.79
MBBC Monterey Bay Bancorp of CA 16.12 3,245 52.3 18.25 11.37 16.25 -0.80 N.A. 9.29
MONT Montgomery Financial Corp ofIN 11.37 1,653 18.8 14.00 10.00 11.25 1.07 N.A. -12.54
MSBK Mutual SB, FSB of Bay City MI 10.37 4,274 44.3 11.25 5.12 11.25 -7.82 18.51 88.55
NHTB NH Thrift Bancshares of NH 16.50 2,041 33.7 16.50 9.75 16.25 1.54 257.14 30.74
NSLB NS&L Bancorp of Neosho MO 16.62 708 11.8 17.25 12.00 16.62 0.00 N.A. 22.03
NMSB Newmil Bancorp. of CT* 11.75 3,888 45.7 11.87 7.00 11.25 4.44 84.46 20.51
NASB North American SB of MO 53.00 2,257 119.6 55.00 29.50 50.00 6.00 ***.** 54.74
NBSI North Bancshares of Chicago IL 20.50 997 20.4 20.75 15.25 20.00 2.50 N.A. 24.24
FFFD North Central Bancshares of IA 16.44 3,429 56.4 16.62 10.50 16.19 1.54 N.A. 21.24
NBN Northeast Bancorp of ME* 14.75 1,275 18.8 14.94 12.50 14.75 0.00 25.53 5.36
NEIB Northeast Indiana Bncrp of IN 16.50 1,763 29.1 16.50 12.00 16.00 3.13 N.A. 21.15
NWEQ Northwest Equity Corp. of WI 14.75 839 12.4 15.00 10.25 14.75 0.00 N.A. 21.70
NWSB Northwest SB, MHC of PA (29.9) 16.25 23,376 113.6 16.87 10.75 16.12 0.81 N.A. 21.54
NSSY Norwalk Savings Society of CT* 30.00 2,404 72.1 31.00 20.87 30.12 -0.40 N.A. 28.37
NSSB Norwich Financial Corp. of CT* 22.00 5,400 118.8 23.25 14.12 21.25 3.53 214.29 12.13
NTMG Nutmeg FS&LA of CT 9.00 725 6.5 9.25 7.00 8.50 5.88 N.A. 20.00
OHSL OHSL Financial Corp. of OH 23.75 1,208 28.7 25.25 19.50 24.25 -2.06 N.A. 11.14
OCFC Ocean Fin. Corp. of NJ 34.75 9,059 314.8 35.75 19.62 35.06 -0.88 N.A. 36.27
OCWN Ocwen Financial Corp. of FL 35.00 26,800 938.0 35.00 20.25 32.50 7.69 N.A. 30.84
OFCP Ottawa Financial Corp. of MI 24.62 5,040 124.1 24.62 16.00 23.37 5.35 N.A. 46.46
PFFB PFF Bancorp of Pomona CA 18.50 18,846 348.7 18.75 10.37 18.50 0.00 N.A. 24.41
PSFI PS Financial of Chicago IL 14.62 2,182 31.9 14.87 11.62 14.50 0.83 N.A. 24.43
PVFC PVF Capital Corp. of OH 19.75 2,323 45.9 19.75 12.67 19.00 3.95 348.86 25.40
PCCI Pacific Crest Capital of CA* 14.37 2,938 42.2 14.37 8.13 13.25 8.45 N.A. 24.96
PALM Palfed, Inc. of Aiken SC 16.25 5,278 85.8 17.50 12.00 16.62 -2.23 5.73 16.07
PBCI Pamrapo Bancorp, Inc. of NJ 20.75 2,863 59.4 23.75 18.25 20.25 2.47 268.56 3.75
PFED Park Bancorp of Chicago IL 16.62 2,431 40.4 16.75 10.19 16.75 -0.78 N.A. 27.85
PVSA Parkvale Financial Corp of PA 28.50 4,060 115.7 29.50 20.00 28.25 0.88 244.20 9.62
PBIX Patriot Bank Corp. of PA 17.75 4,266 75.7 16.75 10.62 17.56 1.08 N.A. 31.48
PEEK Peekskill Fin. Corp. of NY 15.37 3,203 49.2 15.75 11.33 15.63 -1.66 N.A. 7.86
PFSB PennFed Fin. Services of NJ 27.25 4,821 131.4 27.75 15.25 27.62 -1.34 N.A. 34.57
PWBC PennFirst Bancorp of PA 18.00 3,911 70.4 18.25 13.50 18.00 0.00 125.56 32.16
PWBK Pennwood SB of PA* 14.75 610 9.0 15.50 9.00 14.75 0.00 N.A. 7.27
PBKB People's SB of Brockton MA* 17.25 3,592 62.0 17.37 9.00 16.87 2.25 190.40 62.43
PFDC Peoples Bancorp of Auburn IN 23.00 2,274 52.3 23.50 19.25 22.75 1.10 31.43 13.58
PBCT Peoples Bank, MHC of CT (37.4)* 26.50 61,017 401.6 27.25 13.58 27.25 -2.75 236.72 37.66
PFFC Peoples Fin. Corp. of OH 16.25 1,491 24.2 16.25 10.87 16.25 0.00 N.A. 20.37
PHBK Peoples Heritage Fin Grp of ME* 38.75 27,371 1,060.6 39.00 19.00 37.62 3.00 153.10 38.39
PHSB Peoples Home SB of PA 13.75 2,760 17.1 14.37 13.75 14.37 -4.31 N.A. N.A.
PBNB Peoples Sav. Fin. Corp. of CT(8)* 39.44 1,907 75.2 39.44 21.75 39.00 1.13 299.59 42.13
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MFSL Maryland Fed. Bancorp of MD 2.03 2.96 29.68 29.28 351.55
MASB MassBank Corp. of Reading MA* 3.61 3.34 33.55 33.55 336.11
MFLR Mayflower Co-Op. Bank of MA* 1.33 1.30 13.21 12.98 140.10
MECH Mechanics SB of Hartford CT* 0.35 0.37 14.50 14.50 149.06
MDBK Medford Savings Bank of MA* 2.33 2.26 20.42 18.91 232.12
MERI Meritrust FSB of Thibodaux LA 1.77 2.88 23.34 23.34 295.34
MWBX Metro West of MA* 0.49 0.50 2.92 2.92 39.77
MCBS Mid Continent Bancshares of KS 1.75 2.00 19.04 19.04 189.57
MIFC Mid Iowa Financial Corp. of IA 0.64 0.84 6.71 6.70 73.73
MCBN Mid-Coast Bancorp of ME 0.96 1.54 21.54 21.54 250.38
MWBI Midwest Bancshares, Inc. of IA 1.84 3.04 27.71 27.71 399.44
MWFD Midwest Fed. Fin. Corp of WI 1.16 1.13 10.66 10.24 123.74
MFFC Milton Fed. Fin. Corp. of OH 0.40 0.55 11.32 11.32 76.82
MIVI Miss. View Hold. Co. of MN 0.58 0.86 15.55 15.55 85.17
MBSP Mitchell Bancorp of NC* 0.47 0.59 15.17 15.17 35.01
MBBC Monterey Bay Bancorp of CA 0.31 0.57 13.98 12.82 130.16
MONT Montgomery Financial Corp ofIN 0.26 0.42 11.22 11.22 62.63
MSBK Mutual SB, FSB of Bay City MI 0.15 0.06 9.31 9.31 155.02
NHTB NH Thrift Bancshares of NH 0.44 0.65 11.47 9.72 153.37
NSLB NS&L Bancorp of Neosho MO 0.41 0.62 16.35 16.35 82.05
NMSB Newmil Bancorp. of CT* 0.65 0.63 8.13 8.13 81.54
NASB North American SB of MO 3.85 3.74 24.35 23.56 305.38
NBSI North Bancshares of Chicago IL 0.54 0.77 17.59 17.59 120.37
FFFD North Central Bancshares of IA 0.98 1.14 14.59 14.59 59.35
NBN Northeast Bancorp of ME* 0.64 0.61 13.49 11.66 194.14
NEIB Northeast Indiana Bncrp of IN 0.94 1.11 14.87 14.87 98.06
NWEQ Northwest Equity Corp. of WI 0.85 1.08 12.94 12.94 113.35
NWSB Northwest SB, MHC of PA (29.9) 0.56 0.81 8.30 7.80 85.45
NSSY Norwalk Savings Society of CT* 2.42 2.77 20.69 19.95 256.81
NSSB Norwich Financial Corp. of CT* 1.34 1.27 14.27 12.80 129.86
NTMG Nutmeg FS&LA of CT 0.34 0.44 7.35 7.35 129.17
OHSL OHSL Financial Corp. of OH 1.08 1.54 21.00 21.00 190.24
OCFC Ocean Fin. Corp. of NJ -0.06 1.30 27.30 27.30 153.20
OCWN Ocwen Financial Corp. of FL 2.59 1.88 8.40 8.40 98.86
OFCP Ottawa Financial Corp. of MI 0.70 1.20 15.07 12.06 170.42
PFFB PFF Bancorp of Pomona CA 0.14 0.56 14.09 13.93 134.55
PSFI PS Financial of Chicago IL 0.66 0.68 14.88 14.88 34.43
PVFC PVF Capital Corp. of OH 1.54 2.03 10.77 10.77 153.36
PCCI Pacific Crest Capital of CA* 1.06 0.90 8.42 8.42 116.66
PALM Palfed, Inc. of Aiken SC 0.07 0.70 10.07 10.07 124.23
PBCI Pamrapo Bancorp, Inc. of NJ 1.07 1.51 16.43 16.29 128.31
PFED Park Bancorp of Chicago IL 0.53 0.74 15.88 15.88 73.21
PVSA Parkvale Financial Corp of PA 1.64 2.46 17.91 17.76 239.56
PBIX Patriot Bank Corp. of PA 0.52 0.71 11.26 11.26 139.25
PEEK Peekskill Fin. Corp. of NY 0.63 0.81 14.58 14.58 57.01
PFSB PennFed Fin. Services of NJ 1.35 2.01 19.55 16.12 259.78
PWBC PennFirst Bancorp of PA 0.76 1.14 12.77 11.65 180.58
PWBK Pennwood SB of PA* 0.46 0.73 15.30 15.30 78.57
PBKB People's SB of Brockton MA* 1.16 0.69 8.57 8.21 152.78
PFDC Peoples Bancorp of Auburn IN 1.36 1.79 18.91 18.91 124.56
PBCT Peoples Bank, MHC of CT (37.4)* 1.33 1.06 10.39 10.38 123.54
PFFC Peoples Fin. Corp. of OH 0.05 0.24 16.18 16.18 60.15
PHBK Peoples Heritage Fin Grp of ME* 2.08 2.22 16.36 13.81 199.41
PHSB Peoples Home SB of PA 0.32 0.67 14.36 14.36 82.97
PBNB Peoples Sav. Fin. Corp. of CT(8)* 2.20 2.19 24.13 22.61 251.23
</TABLE>
<PAGE> 191
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PSFC Peoples Sidney Fin. Corp of OH 14.87 1,785 26.5 14.87 12.56 13.75 8.15 N.A. N.A.
PERM Permanent Bancorp of IN 25.25 2,052 51.8 25.50 15.75 25.50 -0.98 N.A. 24.69
PMFI Perpetual Midwest Fin. of IA 20.50 1,907 39.1 22.00 17.00 20.37 0.64 N.A. 6.49
PERT Perpetual of SC, MHC (46.8) 34.00 1,505 24.0 34.00 20.25 32.00 6.25 N.A. 40.21
PCBC Perry Co. Fin. Corp. of MO 22.25 808 18.0 22.25 15.50 21.00 5.95 N.A. 30.88
PHFC Pittsburgh Home Fin. of PA 15.75 1,983 31.2 15.75 9.69 15.00 5.00 N.A. 17.80
PFSL Pocahnts Fed, MHC of AR (46.4) 22.50 1,629 17.0 22.50 14.25 22.50 0.00 N.A. 28.57
POBS Portsmouth Bank Shrs Inc of NH(8)* 17.12 5,872 100.5 17.87 12.38 17.50 -2.17 64.46 24.78
PTRS Potters Financial Corp of OH 22.00 487 10.7 22.00 15.50 21.88 0.55 N.A. 10.00
PKPS Poughkeepsie Fin. Corp. of NY 8.13 12,595 102.4 8.13 4.75 7.59 7.11 4.90 54.86
PRBC Prestige Bancorp of PA 15.63 920 14.4 16.12 9.75 15.63 0.00 N.A. 15.78
PETE Primary Bank of NH(8)* 26.75 2,087 55.8 26.75 11.19 26.00 2.88 N.A. 75.52
PFNC Progress Financial Corp. of PA 10.75 3,814 41.0 11.50 5.75 11.12 -3.33 -2.36 28.43
PSBK Progressive Bank, Inc. of NY* 29.75 3,825 113.8 32.00 18.75 31.00 -4.03 122.51 30.77
PROV Provident Fin. Holdings of CA 18.62 5,075 94.5 19.00 10.12 19.00 -2.00 N.A. 33.00
PULB Pulaski SB, MHC of MO (29.0) 19.87 2,094 11.9 20.00 12.25 19.75 0.61 N.A. 37.03
PLSK Pulaski SB, MHC of NJ (46.0) 13.37 2,070 12.7 13.87 11.50 13.37 0.00 N.A. N.A.
PULS Pulse Bancorp of S. River NJ 20.37 3,061 62.4 20.37 15.50 20.25 0.59 64.67 29.33
QCFB QCF Bancorp of Virginia MN 24.50 1,426 34.9 24.50 14.75 22.75 7.69 N.A. 34.25
QCBC Quaker City Bancorp of CA 19.00 4,778 90.8 19.00 10.40 18.00 5.56 153.33 25.00
QCSB Queens County Bancorp of NY* 48.75 11,137 542.9 48.75 23.50 45.94 6.12 N.A. 54.37
RCSB RCSB Financial, Inc. of NY(8)* 48.50 14,591 707.7 48.69 24.00 47.69 1.70 293.99 67.24
RARB Raritan Bancorp. of Raritan NJ* 23.00 2,297 52.8 23.00 13.67 21.25 8.24 257.14 48.39
REDF RedFed Bancorp of Redlands CA 16.75 7,164 120.0 16.87 8.50 16.25 3.08 N.A. 24.07
RELY Reliance Bancorp, Inc. of NY 28.75 8,823 253.7 29.62 15.87 28.25 1.77 N.A. 47.44
RELI Reliance Bancshares Inc of WI(8)* 8.13 2,528 20.6 10.12 6.50 8.25 -1.45 N.A. 20.44
RIVR River Valley Bancorp of IN 15.50 1,190 18.4 16.12 13.25 15.50 0.00 N.A. 12.73
RSLN Roslyn Bancorp, Inc. of NY* 22.19 43,642 968.4 22.87 15.00 22.50 -1.38 N.A. N.A.
RVSB Rvrview SB,FSB MHC of WA(41.7)(8) 23.75 2,416 21.8 26.00 13.07 26.00 -8.65 N.A. 49.28
SCCB S. Carolina Comm. Bnshrs of SC 19.00 704 13.4 20.50 15.00 19.00 0.00 N.A. 26.67
SBFL SB Fngr Lakes MHC of NY (33.1) 17.75 1,785 10.5 17.75 12.75 17.75 0.00 N.A. 29.09
SFED SFS Bancorp of Schenectady NY 18.25 1,271 23.2 18.37 12.00 18.25 0.00 N.A. 23.73
SGVB SGV Bancorp of W. Covina CA 15.00 2,342 35.1 15.00 7.75 13.75 9.09 N.A. 33.33
SISB SIS Bank of Springfield MA* 28.25 5,662 160.0 29.62 17.50 27.75 1.80 N.A. 23.52
SWCB Sandwich Co-Op. Bank of MA* 32.75 1,906 62.4 34.00 19.50 31.50 3.97 279.93 10.08
SECP Security Capital Corp. of WI(8) 95.69 9,203 880.6 96.75 59.25 95.50 0.20 N.A. 29.75
SFSL Security First Corp. of OH 23.75 5,003 118.8 23.75 13.25 22.00 7.95 50.79 31.07
SMFC Sho-Me Fin. Corp. of MO(8) 37.62 1,519 57.1 40.25 16.25 37.62 0.00 N.A. 72.97
SOBI Sobieski Bancorp of S. Bend IN 16.25 760 12.4 16.25 11.75 15.50 4.84 N.A. 12.07
SOSA Somerset Savings Bank of MA(8)* 3.13 16,652 52.1 3.13 1.44 2.78 12.59 -38.87 58.88
SSFC South Street Fin. Corp. of NC* 17.00 4,496 76.4 17.25 12.12 17.00 0.00 N.A. 21.43
SCBS Southern Commun. Bncshrs of AL 15.25 1,137 17.3 15.25 13.00 15.25 0.00 N.A. 15.09
SMBC Southern Missouri Bncrp of MO 17.50 1,638 28.7 18.00 13.50 17.25 1.45 N.A. 16.67
SWBI Southwest Bancshares of IL 21.12 2,652 56.0 21.50 17.83 20.50 3.02 111.20 15.73
SVRN Sovereign Bancorp of PA 15.94 70,010 1,116.0 16.00 8.02 16.00 -0.38 256.60 45.70
STFR St. Francis Cap. Corp. of WI 36.00 5,386 193.9 38.75 25.00 36.00 0.00 N.A. 38.46
SPBC St. Paul Bancorp, Inc. of IL 23.12 33,988 785.8 24.00 12.13 22.11 4.57 107.73 47.54
STND Standard Fin. of Chicago IL(8) 24.94 16,204 404.1 25.00 15.50 24.75 0.77 N.A. 27.12
SFFC StateFed Financial Corp. of IA 19.25 790 15.2 20.00 15.00 19.50 -1.28 N.A. 16.67
SFIN Statewide Fin. Corp. of NJ 18.37 4,771 87.6 19.00 11.50 18.87 -2.65 N.A. 27.84
STSA Sterling Financial Corp. of WA 19.00 5,543 105.3 19.25 13.00 19.25 -1.30 109.02 34.56
SFSB SuburbFed Fin. Corp. of IL 26.75 1,261 33.7 26.87 16.25 25.75 3.88 301.05 40.79
SBCN Suburban Bancorp. of OH(8) 22.00 1,475 32.5 22.12 14.75 20.75 6.02 N.A. 44.26
ROSE T R Financial Corp. of NY* 23.87 17,632 420.9 25.94 13.31 23.12 3.24 N.A. 34.48
THRD TF Financial Corp. of PA 20.00 4,087 81.7 20.50 13.75 20.12 -0.60 N.A. 23.08
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PSFC Peoples Sidney Fin. Corp of OH 0.56 0.73 14.09 14.09 60.57
PERM Permanent Bancorp of IN 0.47 1.02 19.52 19.33 201.25
PMFI Perpetual Midwest Fin. of IA 0.18 0.52 17.72 17.72 208.59
PERT Perpetual of SC, MHC (46.8) 1.00 1.41 19.69 19.69 148.17
PCBC Perry Co. Fin. Corp. of MO 0.70 0.95 18.76 18.76 99.51
PHFC Pittsburgh Home Fin. of PA 0.59 0.84 13.71 13.55 119.51
PFSL Pocahnts Fed, MHC of AR (46.4) 1.34 1.87 14.61 14.61 229.14
POBS Portsmouth Bank Shrs Inc of NH(8)* 1.02 0.89 11.25 11.25 44.78
PTRS Potters Financial Corp of OH 0.75 1.62 21.38 21.38 240.08
PKPS Poughkeepsie Fin. Corp. of NY 0.14 0.32 5.75 5.75 68.37
PRBC Prestige Bancorp of PA 0.32 0.68 16.11 16.11 137.86
PETE Primary Bank of NH(8)* 1.68 1.66 13.82 13.79 208.78
PFNC Progress Financial Corp. of PA 0.44 0.54 5.47 4.79 104.97
PSBK Progressive Bank, Inc. of NY* 2.48 2.50 19.17 16.98 229.46
PROV Provident Fin. Holdings of CA 0.26 0.13 17.06 17.06 119.94
PULB Pulaski SB, MHC of MO (29.0) 0.42 0.67 10.75 10.75 85.39
PLSK Pulaski SB, MHC of NJ (46.0) 0.23 0.52 9.83 9.83 81.83
PULS Pulse Bancorp of S. River NJ 1.17 1.75 13.14 13.14 168.55
QCFB QCF Bancorp of Virginia MN 1.32 1.32 18.35 18.35 104.01
QCBC Quaker City Bancorp of CA 0.49 0.89 14.56 14.54 163.42
QCSB Queens County Bancorp of NY* 2.05 2.07 18.47 18.47 123.31
RCSB RCSB Financial, Inc. of NY(8)* 2.66 2.64 21.69 21.14 276.36
RARB Raritan Bancorp. of Raritan NJ* 1.45 1.58 12.54 12.31 163.32
REDF RedFed Bancorp of Redlands CA 0.15 0.57 10.37 10.36 126.84
RELY Reliance Bancorp, Inc. of NY 1.16 1.76 17.56 12.31 218.38
RELI Reliance Bancshares Inc of WI(8)* 0.25 0.25 11.59 11.59 18.98
RIVR River Valley Bancorp of IN -0.21 -0.21 14.37 14.15 116.24
RSLN Roslyn Bancorp, Inc. of NY* 0.23 0.93 14.08 14.01 65.29
RVSB Rvrview SB,FSB MHC of WA(41.7)(8) 0.83 1.06 10.36 9.39 92.87
SCCB S. Carolina Comm. Bnshrs of SC 0.52 0.70 17.11 17.11 65.93
SBFL SB Fngr Lakes MHC of NY (33.1) 0.08 0.54 11.27 11.27 119.23
SFED SFS Bancorp of Schenectady NY 0.60 1.08 17.26 17.26 132.84
SGVB SGV Bancorp of W. Covina CA 0.22 0.57 12.41 12.18 170.70
SISB SIS Bank of Springfield MA* 3.27 3.24 17.89 17.89 247.92
SWCB Sandwich Co-Op. Bank of MA* 2.24 2.27 20.55 19.59 249.34
SECP Security Capital Corp. of WI(8) 4.40 5.27 62.82 62.82 396.28
SFSL Security First Corp. of OH 1.28 1.62 11.88 11.67 126.88
SMFC Sho-Me Fin. Corp. of MO(8) 1.73 2.06 19.13 19.13 200.46
SOBI Sobieski Bancorp of S. Bend IN 0.30 0.60 16.03 16.03 104.05
SOSA Somerset Savings Bank of MA(8)* 0.18 0.18 1.85 1.85 31.36
SSFC South Street Fin. Corp. of NC* 0.35 0.47 13.51 13.51 53.11
SCBS Southern Commun. Bncshrs of AL 0.40 0.71 13.30 13.30 64.05
SMBC Southern Missouri Bncrp of MO 1.02 1.00 15.85 15.85 101.15
SWBI Southwest Bancshares of IL 1.04 1.45 15.11 15.11 140.11
SVRN Sovereign Bancorp of PA 0.55 0.91 5.94 4.36 146.93
STFR St. Francis Cap. Corp. of WI 1.53 1.81 23.74 20.89 293.16
SPBC St. Paul Bancorp, Inc. of IL 0.86 1.27 11.53 11.49 131.95
STND Standard Fin. of Chicago IL(8) 0.68 1.02 16.74 16.72 153.60
SFFC StateFed Financial Corp. of IA 1.05 1.29 19.00 19.00 107.95
SFIN Statewide Fin. Corp. of NJ 0.70 1.22 13.21 13.18 141.98
STSA Sterling Financial Corp. of WA 0.18 0.86 11.22 9.52 280.93
SFSB SuburbFed Fin. Corp. of IL 1.02 1.67 21.23 21.14 323.39
SBCN Suburban Bancorp. of OH(8) 0.72 1.07 17.56 17.56 150.46
ROSE T R Financial Corp. of NY* 1.76 1.54 11.90 11.90 193.08
THRD TF Financial Corp. of PA 0.79 1.11 17.09 14.90 157.66
</TABLE>
<PAGE> 192
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part One
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Price Change Data
Market Capitalization -----------------------------------------------
----------------------- 52 Week (1) % Change From
Shares Market --------------- -----------------------
Price/ Outst- Capital- Last Last Dec 31, Dec 31,
Financial Institution Share(1) anding ization(9) High Low Week Week 1994(2) 1995(2)
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- --------
($) (000) ($Mil) ($) ($) ($) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
TPNZ Tappan Zee Fin., Inc. of NY 16.62 1,534 25.5 17.50 12.00 17.12 -2.92 N.A. 22.03
ESBK The Elmira SB FSB of Elmira NY* 22.50 706 15.9 22.50 14.75 21.25 5.88 56.58 23.29
GRTR The Greater New York SB of NY(8)* 21.75 13,678 297.5 22.44 10.37 21.62 0.60 133.62 59.69
TSBS Trenton SB, FSB MHC of NJ(35.0 20.25 9,037 63.1 21.50 12.37 20.75 -2.41 N.A. 26.56
TRIC Tri-County Bancorp of WY 24.25 609 14.8 24.25 18.00 24.25 0.00 N.A. 34.72
TWIN Twin City Bancorp of TN 20.25 853 17.3 20.50 16.25 20.00 1.25 N.A. 17.39
UFRM United FS&LA of Rocky Mount NC 12.25 3,066 37.6 12.25 7.00 12.25 0.00 276.92 44.12
UBMT United Fin. Corp. of MT 24.00 1,223 29.4 24.00 18.00 24.00 0.00 128.57 24.68
VABF Va. Beach Fed. Fin. Corp of VA 13.87 4,972 69.0 15.00 7.00 15.00 -7.53 195.74 46.93
VFFC Virginia First Savings of VA(8) 23.00 5,805 133.5 23.37 11.00 23.12 -0.52 ***.** 80.39
WHGB WHG Bancshares of MD 15.00 1,539 23.1 15.50 11.00 15.00 0.00 N.A. 14.33
WSFS WSFS Financial Corp. of DE* 14.50 12,530 181.7 14.50 6.75 14.12 2.69 100.00 42.30
WVFC WVS Financial Corp. of PA* 26.75 1,737 46.5 27.25 20.25 26.12 2.41 N.A. 8.65
WRNB Warren Bancorp of Peabody MA* 17.75 3,781 67.1 19.00 11.87 17.62 0.74 426.71 18.33
WFSL Washington FS&LA of Seattle WA 26.47 47,462 1,256.3 27.69 18.86 26.25 0.84 81.43 9.88
WAMU Washington Mutual Inc. of WA* 65.16 126,357 8,233.4 65.19 30.12 64.31 1.32 251.08 50.45
WYNE Wayne Bancorp of NJ 19.75 2,156 42.6 20.25 11.25 19.62 0.66 N.A. 29.51
WAYN Wayne S&L Co. MHC of OH (47.8) 18.00 2,248 12.9 18.50 12.67 18.00 0.00 N.A. 10.23
WCFB Wbstr Cty FSB MHC of IA (45.2) 16.25 2,100 15.4 16.25 12.50 16.12 0.81 N.A. 18.18
WBST Webster Financial Corp. of CT 47.12 11,954 563.3 47.12 29.00 46.62 1.07 399.15 28.22
WEFC Wells Fin. Corp. of Wells MN 15.75 2,024 31.9 16.00 11.50 15.50 1.61 N.A. 20.05
WCBI WestCo Bancorp of IL 26.00 2,476 64.4 26.37 20.00 26.00 0.00 160.00 20.93
WSTR WesterFed Fin. Corp. of MT 22.81 5,551 126.6 23.37 13.87 22.00 3.68 N.A. 24.99
WOFC Western Ohio Fin. Corp. of OH 22.00 2,312 50.9 22.50 19.50 21.50 2.33 N.A. 1.15
WWFC Westwood Fin. Corp. of NJ 21.25 645 13.7 21.75 10.25 21.75 -2.30 N.A. 28.79
WEHO Westwood Hmstd Fin Corp of OH 14.75 2,843 41.9 14.87 10.37 14.75 0.00 N.A. 21.70
WFCO Winton Financial Corp. of OH 15.00 1,986 29.8 15.00 11.25 12.50 20.00 N.A. 30.43
FFWD Wood Bancorp of OH 22.00 1,493 32.8 23.75 12.67 23.00 -4.35 N.A. 29.41
YFCB Yonkers Fin. Corp. of NY 16.62 3,180 52.9 16.62 9.50 16.37 1.53 N.A. 29.14
YFED York Financial Corp. of PA 21.50 6,971 149.9 21.50 14.54 20.12 6.86 127.51 32.31
</TABLE>
<TABLE>
<CAPTION>
Current Per Share Financials
----------------------------------------
Tangible
Trailing 12 Mo. Book Book
12 Mo. Core Value/ Value/ Assets/
Financial Institution EPS(3) EPS(3) Share Share(4) Share
- --------------------- -------- ------- ------- ------- -------
($) ($) ($) ($) ($)
<S> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
TPNZ Tappan Zee Fin., Inc. of NY 0.52 0.48 14.00 14.00 78.14
ESBK The Elmira SB FSB of Elmira NY* 0.89 0.85 19.87 19.02 315.32
GRTR The Greater New York SB of NY(8)* 0.86 0.74 11.78 11.78 187.93
TSBS Trenton SB, FSB MHC of NJ(35.0 0.84 0.74 11.54 10.55 69.31
TRIC Tri-County Bancorp of WY 1.00 1.30 21.62 21.62 141.17
TWIN Twin City Bancorp of TN 0.70 0.97 15.83 15.83 122.49
UFRM United FS&LA of Rocky Mount NC 0.19 0.40 6.70 6.70 88.12
UBMT United Fin. Corp. of MT 0.94 1.16 19.95 19.95 88.08
VABF Va. Beach Fed. Fin. Corp of VA 0.18 0.50 8.29 8.29 122.16
VFFC Virginia First Savings of VA(8) 1.81 1.66 11.35 10.96 140.79
WHGB WHG Bancshares of MD 0.47 0.47 14.00 14.00 63.98
WSFS WSFS Financial Corp. of DE* 1.39 1.40 6.05 5.99 117.97
WVFC WVS Financial Corp. of PA* 1.64 2.04 20.50 20.50 161.14
WRNB Warren Bancorp of Peabody MA* 1.97 1.63 9.65 9.65 95.55
WFSL Washington FS&LA of Seattle WA 1.86 2.06 14.09 12.69 121.97
WAMU Washington Mutual Inc. of WA* 0.67 1.99 18.28 17.25 364.45
WYNE Wayne Bancorp of NJ 0.39 0.39 16.57 16.57 113.84
WAYN Wayne S&L Co. MHC of OH (47.8) 0.30 0.71 10.15 10.15 111.24
WCFB Wbstr Cty FSB MHC of IA (45.2) 0.46 0.61 10.45 10.45 44.36
WBST Webster Financial Corp. of CT 1.20 2.43 23.72 19.96 467.09
WEFC Wells Fin. Corp. of Wells MN 0.62 1.00 14.20 14.20 99.75
WCBI WestCo Bancorp of IL 1.37 1.76 19.49 19.49 125.17
WSTR WesterFed Fin. Corp. of MT 0.65 0.90 18.44 14.57 167.98
WOFC Western Ohio Fin. Corp. of OH 0.48 0.69 23.21 21.87 173.04
WWFC Westwood Fin. Corp. of NJ 0.67 1.24 15.43 13.67 167.41
WEHO Westwood Hmstd Fin Corp of OH 0.22 0.37 14.15 14.15 45.71
WFCO Winton Financial Corp. of OH 0.84 1.07 10.49 10.23 147.15
FFWD Wood Bancorp of OH 1.02 1.26 13.91 13.91 109.51
YFCB Yonkers Fin. Corp. of NY 0.67 0.92 13.68 13.68 89.43
YFED York Financial Corp. of PA 0.97 1.25 13.99 13.99 166.02
</TABLE>
<PAGE> 193
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1
Weekly Thrift Market Line - Part Two
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
SAIF-Insured Thrifts(314) 13.14 12.87 0.63 5.33 3.56 0.85 7.34 0.80 123.10 0.83
NYSE Traded Companies(8) 6.02 5.78 0.50 7.78 4.25 0.67 11.62 1.42 69.98 1.38
AMEX Traded Companies(18) 15.54 15.44 0.60 4.60 3.05 0.94 7.22 0.71 120.82 0.74
NASDAQ Listed OTC Companies(288) 13.21 12.93 0.63 5.30 3.57 0.85 7.22 0.78 125.05 0.82
California Companies(21) 7.52 6.89 0.28 4.50 2.84 0.36 6.45 1.72 64.16 1.35
Florida Companies(6) 7.94 7.53 0.90 10.91 4.22 0.82 9.69 1.40 66.01 0.81
Mid-Atlantic Companies(61) 11.04 10.68 0.62 6.13 4.00 0.86 8.71 0.91 97.56 0.94
Mid-West Companies(152) 14.35 14.16 0.65 5.06 3.62 0.89 6.89 0.62 138.50 0.70
New England Companies(10) 8.48 8.08 0.41 5.00 3.66 0.64 8.25 0.74 96.48 1.04
North-West Companies(7) 15.94 15.62 0.83 6.39 3.48 1.05 8.80 0.53 104.72 0.60
South-East Companies(45) 15.92 15.74 0.71 5.12 3.16 0.96 6.89 0.88 126.87 0.90
South-West Companies(6) 11.27 11.10 0.31 1.80 1.39 0.59 5.41 0.88 53.10 0.72
Western Companies (Excl CA)(6) 16.77 16.32 0.99 6.61 4.22 1.18 7.76 0.23 299.54 0.73
Thrift Strategy(248) 14.46 14.20 0.64 4.79 3.52 0.88 6.76 0.70 128.09 0.74
Mortgage Banker Strategy(38) 7.46 7.05 0.52 7.23 3.91 0.65 9.38 1.12 96.29 1.00
Real Estate Strategy(11) 7.34 7.14 0.47 5.73 3.18 0.74 9.77 1.66 100.42 1.37
Diversified Strategy(12) 7.83 7.68 1.08 13.23 5.10 1.14 14.52 1.36 106.28 1.32
Retail Banking Strategy(5) 11.04 10.86 0.26 2.38 0.95 0.28 2.94 0.76 164.76 1.62
Companies Issuing Dividends(260) 13.33 13.06 0.68 5.78 3.89 0.91 7.77 0.73 124.93 0.79
Companies Without Dividends(54) 12.14 11.86 0.34 3.03 1.83 0.52 5.13 1.22 111.37 1.06
Equity/Assets less than 6%(23) 4.96 4.62 0.41 8.01 4.14 0.59 11.78 1.14 94.91 1.13
Equity/Assets 6-12%(153) 8.62 8.22 0.57 6.51 3.85 0.75 8.74 0.95 113.75 0.95
Equity/Assets greater than 12%(138) 19.08 18.95 0.72 3.70 3.17 0.99 5.19 0.57 138.75 0.65
Converted Last 3 Mths (no MHC)(8) 20.57 20.48 0.57 2.59 2.30 0.76 3.65 1.00 42.00 0.96
Actively Traded Companies(44) 8.68 8.45 0.71 8.56 4.77 0.94 11.67 1.03 107.40 0.99
Market Value Below $20 Million(64) 15.14 15.07 0.53 3.34 2.93 0.79 5.24 0.76 122.70 0.70
Holding Company Structure(276) 13.67 13.41 0.63 5.13 3.52 0.85 7.11 0.79 121.29 0.81
Assets Over $1 Billion(63) 7.84 7.29 0.65 8.41 4.24 0.83 11.13 1.03 89.60 1.02
Assets $500 Million-$1 Billion(50) 10.34 9.86 0.60 5.91 3.72 0.78 7.68 0.80 160.90 1.03
Assets $250-$500 Million(67) 11.16 10.83 0.57 5.23 3.56 0.82 7.60 0.82 118.84 0.78
Assets less than $250 Million(134) 17.44 17.39 0.66 3.82 3.20 0.90 5.44 0.67 127.09 0.68
Goodwill Companies(124) 8.97 8.37 0.59 6.68 3.96 0.78 9.04 0.86 113.51 0.90
Non-Goodwill Companies(189) 15.86 15.81 0.65 4.46 3.30 0.89 6.25 0.76 129.91 0.78
Acquirors of FSLIC Cases(10) 7.14 6.76 0.54 7.07 3.95 0.80 11.25 1.57 52.90 0.92
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. SAIF-Insured Thrifts(no MHCs)
- ----------------------------------------------
SAIF-Insured Thrifts(314) 21.15 132.93 16.75 136.84 18.51 0.36 1.71 36.12
NYSE Traded Companies(8) 17.90 174.60 10.74 181.03 15.78 0.29 0.83 18.82
AMEX Traded Companies(18) 23.12 121.21 19.26 122.57 17.52 0.39 2.13 43.54
NASDAQ Listed OTC Companies(288) 21.10 132.49 16.78 136.47 18.64 0.36 1.71 36.40
California Companies(21) 17.32 142.89 10.52 147.25 18.83 0.15 0.53 13.08
Florida Companies(6) 17.70 143.71 15.69 162.63 19.36 0.24 0.90 14.49
Mid-Atlantic Companies(61) 20.91 135.96 14.69 142.92 16.99 0.38 1.66 37.33
Mid-West Companies(152) 21.33 127.06 17.32 130.04 18.69 0.36 1.82 37.03
New England Companies(10) 22.30 134.91 11.13 146.35 18.35 0.43 1.67 39.01
North-West Companies(7) 18.79 142.81 21.70 153.00 18.40 0.35 1.45 27.25
South-East Companies(45) 21.68 143.64 21.64 144.34 19.90 0.42 2.02 42.59
South-West Companies(6) 23.15 118.23 12.51 124.76 18.71 0.31 1.49 50.88
Western Companies (Excl CA)(6) 22.75 140.31 21.41 126.40 20.21 0.55 2.66 57.88
Thrift Strategy(248) 21.58 126.77 17.66 130.74 18.79 0.37 1.84 39.19
Mortgage Banker Strategy(38) 20.12 159.80 12.10 168.15 17.75 0.33 1.22 26.08
Real Estate Strategy(11) 16.54 159.94 11.43 162.93 16.94 0.14 0.81 16.22
Diversified Strategy(12) 19.36 197.58 18.70 190.77 16.31 0.44 1.56 30.75
Retail Banking Strategy(5) 19.56 119.65 12.67 122.65 17.72 0.16 1.12 16.90
Companies Issuing Dividends(260) 21.28 134.29 17.09 138.46 18.42 0.43 2.04 43.07
Companies Without Dividends(54) 19.75 125.97 14.97 128.41 19.20 0.00 0.00 0.00
Equity/Assets less than 6%(23) 18.72 164.44 9.37 177.84 16.84 0.23 0.81 16.30
Equity/Assets 6-12%(153) 20.16 145.22 12.83 150.77 17.15 0.38 1.63 35.74
Equity/Assets greater than 12%(138) 23.03 116.69 21.93 118.03 20.49 0.35 1.94 41.00
Converted Last 3 Mths (no MHC)(8) 27.46 111.54 23.06 112.08 22.65 0.05 0.44 0.00
Actively Traded Companies(44) 19.54 162.90 14.26 168.89 16.46 0.49 1.74 32.68
Market Value Below $20 Million(64) 22.93 108.91 16.53 109.79 20.29 0.33 1.98 44.99
Holding Company Structure(276) 21.53 131.15 17.17 135.03 18.79 0.37 1.75 37.60
Assets Over $1 Billion(63) 20.07 163.08 13.58 177.63 17.18 0.45 1.41 29.98
Assets $500 Million-$1 Billion(50) 19.62 150.64 15.34 154.22 18.40 0.34 1.54 39.27
Assets $250-$500 Million(67) 20.76 133.07 14.80 136.12 17.36 0.35 1.73 33.06
Assets less than $250 Million(134) 22.63 114.69 19.58 115.28 19.82 0.33 1.89 40.04
Goodwill Companies(124) 20.38 149.08 13.25 159.28 17.59 0.39 1.61 34.04
Non-Goodwill Companies(189) 21.73 122.73 19.04 122.81 19.13 0.34 1.78 37.84
Acquirors of FSLIC Cases(10) 19.27 160.14 11.71 168.56 16.70 0.38 1.43 30.06
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 194
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(69) 11.90 11.54 0.99 10.39 5.87 1.02 10.51 0.98 124.14 1.47
NYSE Traded Companies(3) 7.98 6.42 0.76 10.53 5.59 0.76 10.86 2.16 39.24 1.08
AMEX Traded Companies(5) 12.93 12.71 0.80 8.54 4.94 0.82 8.83 1.08 109.25 1.43
NASDAQ Listed OTC Companies(61) 12.04 11.74 1.03 10.57 5.98 1.06 10.65 0.89 130.97 1.50
California Companies(3) 8.67 8.65 1.05 12.33 7.00 0.98 11.27 1.43 74.61 1.40
Mid-Atlantic Companies(18) 12.10 11.42 0.79 8.21 4.56 0.91 8.95 1.00 117.28 1.44
Mid-West Companies(2) 25.56 24.11 0.54 2.08 2.04 0.82 3.16 0.74 41.29 0.53
New England Companies(37) 9.08 8.78 1.10 12.91 7.19 1.07 12.48 1.04 137.21 1.71
North-West Companies(4) 10.49 10.42 0.96 8.81 4.53 1.05 10.74 0.42 148.23 1.06
South-East Companies(5) 28.04 28.04 1.06 4.11 3.28 1.17 4.54 0.70 110.74 0.77
Thrift Strategy(45) 13.43 13.01 1.00 9.41 5.57 1.01 9.27 0.91 128.79 1.37
Mortgage Banker Strategy(10) 9.50 9.38 0.76 10.54 5.51 1.00 12.12 1.14 118.19 1.58
Real Estate Strategy(6) 9.04 9.03 1.31 14.62 7.98 1.21 13.51 1.39 91.31 1.82
Diversified Strategy(6) 6.57 6.05 1.05 15.06 6.95 1.13 16.67 1.03 138.02 1.94
Retail Banking Strategy(2) 6.30 6.03 0.28 4.48 3.96 0.27 4.28 0.83 76.33 0.80
Companies Issuing Dividends(55) 11.52 11.12 1.03 10.58 6.07 1.06 10.68 0.87 133.92 1.48
Companies Without Dividends(14) 13.70 13.53 0.82 9.51 4.94 0.88 9.70 1.48 82.04 1.46
Equity/Assets less than 6%(5) 5.37 5.21 0.73 13.14 5.81 0.80 14.68 1.59 69.24 1.64
Equity/Assets 6-12%(45) 8.43 7.94 1.05 12.61 7.02 1.03 12.29 1.10 125.57 1.59
Equity/Assets greater than 12%(19) 21.57 21.47 0.92 4.57 3.23 1.08 5.34 0.56 136.24 1.16
Actively Traded Companies(24) 8.69 8.30 1.11 13.07 7.11 1.10 13.03 0.92 131.86 1.60
Market Value Below $20 Million(8) 18.51 18.04 0.68 4.78 3.88 0.84 5.36 1.19 61.14 1.04
Holding Company Structure(45) 13.25 12.91 1.03 9.84 5.49 1.08 10.14 0.78 145.29 1.52
Assets Over $1 Billion(17) 8.86 8.25 0.97 12.24 6.07 1.09 13.31 1.09 118.24 1.58
Assets $500 Million-$1 Billion(16) 10.04 9.52 1.06 11.08 6.32 1.03 10.65 0.96 132.06 1.56
Assets $250-$500 Million(19) 11.19 11.07 0.98 10.58 6.06 0.96 10.36 0.84 138.55 1.58
Assets less than $250 Million(17) 17.16 16.96 0.97 7.85 5.08 1.02 7.90 1.01 110.32 1.19
Goodwill Companies(31) 9.08 8.29 0.87 10.73 5.97 0.94 11.25 1.21 106.44 1.58
Non-Goodwill Companies(37) 14.27 14.27 1.10 10.11 5.78 1.10 9.88 0.79 139.94 1.39
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. BIF-Insured Thrifts(no MHCs)
- ---------------------------------------------
BIF-Insured Thrifts(69) 15.55 155.28 17.42 157.25 16.16 0.46 1.79 28.23
NYSE Traded Companies(3) 17.96 174.04 14.15 162.56 18.07 0.33 0.53 10.38
AMEX Traded Companies(5) 15.53 148.44 17.43 153.73 14.47 0.62 2.47 33.65
NASDAQ Listed OTC Companies(61) 15.37 154.81 17.62 157.41 16.15 0.46 1.80 29.08
California Companies(3) 14.53 155.35 13.37 155.59 16.06 0.00 0.00 0.00
Mid-Atlantic Companies(18) 17.86 151.09 18.09 153.09 18.14 0.45 1.65 35.12
Mid-West Companies(2) 0.00 90.27 23.07 95.70 0.00 0.00 0.00 0.00
New England Companies(37) 13.94 164.79 14.54 167.43 14.52 0.51 2.17 29.52
North-West Companies(4) 19.45 173.29 19.83 173.29 15.07 0.48 1.57 28.82
South-East Companies(5) 20.23 113.96 31.46 113.96 23.26 0.59 1.61 25.72
Thrift Strategy(45) 15.90 147.77 18.54 151.01 16.53 0.50 1.91 31.66
Mortgage Banker Strategy(10) 16.14 171.49 15.90 174.18 16.50 0.33 1.46 10.19
Real Estate Strategy(6) 12.97 168.67 15.25 168.80 13.78 0.18 1.20 14.44
Diversified Strategy(6) 12.89 197.94 14.50 194.19 13.10 0.54 1.58 21.77
Retail Banking Strategy(2) 25.28 113.24 7.14 118.30 26.47 0.64 2.84 71.91
Companies Issuing Dividends(55) 15.87 156.13 17.37 158.39 16.25 0.56 2.17 34.43
Companies Without Dividends(14) 13.44 151.43 17.66 152.46 15.64 0.00 0.00 0.00
Equity/Assets less than 6%(5) 14.08 205.84 12.88 210.17 16.18 0.37 1.04 12.64
Equity/Assets 6-12%(45) 14.45 164.95 13.87 168.26 14.85 0.49 1.99 27.34
Equity/Assets greater than 12%(19) 20.91 121.31 26.75 121.72 20.75 0.42 1.50 34.72
Actively Traded Companies(24) 13.95 168.64 14.96 171.46 14.70 0.52 1.90 26.47
Market Value Below $20 Million(8) 20.87 110.31 19.54 115.34 22.69 0.31 1.72 39.43
Holding Company Structure(45) 16.18 153.67 19.29 156.20 16.59 0.48 1.83 28.21
Assets Over $1 Billion(17) 15.69 180.63 17.22 178.77 16.22 0.55 1.70 23.13
Assets $500 Million-$1 Billion(16) 15.40 160.43 15.75 169.41 15.20 0.47 1.84 26.28
Assets $250-$500 Million(19) 14.33 152.75 16.04 154.61 14.35 0.40 1.74 27.66
Assets less than $250 Million(17) 17.03 132.55 20.44 134.84 18.80 0.43 1.87 34.54
Goodwill Companies(31) 15.57 160.82 14.40 166.25 16.29 0.51 1.88 27.81
Non-Goodwill Companies(37) 15.54 150.66 19.95 150.66 16.05 0.42 1.71 28.56
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 195
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(21) 11.58 11.32 0.56 4.91 2.75 0.85 7.72 0.52 165.73 0.76
BIF-Insured Thrifts(2) 9.94 9.94 0.56 6.87 2.54 0.61 6.84 1.85 84.60 1.87
NASDAQ Listed OTC Companies(23) 11.41 11.18 0.56 5.11 2.73 0.83 7.63 0.66 156.19 0.88
Florida Companies(3) 9.42 9.29 0.65 6.87 3.45 0.93 9.78 0.45 120.09 0.78
Mid-Atlantic Companies(10) 12.03 11.57 0.48 3.65 2.08 0.76 6.22 0.88 177.29 0.99
Mid-West Companies(7) 11.68 11.67 0.51 4.76 2.93 0.83 7.88 0.36 150.22 0.63
New England Companies(1) 8.41 8.40 1.10 13.63 5.02 0.88 10.86 0.91 125.48 1.68
South-East Companies(1) 13.29 13.29 0.75 6.48 2.94 1.06 9.13 0.00 0.00 1.01
Thrift Strategy(21) 11.57 11.33 0.53 4.66 2.61 0.82 7.46 0.65 158.11 0.83
Diversified Strategy(1) 8.41 8.40 1.10 13.63 5.02 0.88 10.86 0.91 125.48 1.68
Companies Issuing Dividends(22) 11.19 10.95 0.57 5.25 2.78 0.84 7.85 0.66 163.85 0.89
Companies Without Dividends(1) 15.65 15.65 0.37 2.35 1.71 0.54 3.43 0.74 33.56 0.66
Equity/Assets 6-12%(15) 9.10 8.86 0.47 5.41 2.77 0.76 8.39 0.73 110.98 1.00
Equity/Assets greater than 12%(8) 15.70 15.50 0.72 4.55 2.65 0.96 6.22 0.50 303.10 0.62
Actively Traded Companies(1) 9.19 8.15 0.51 5.44 2.51 0.90 9.61 0.58 93.31 1.05
Holding Company Structure(1) 9.19 8.15 0.51 5.44 2.51 0.90 9.61 0.58 93.31 1.05
Assets Over $1 Billion(5) 8.69 8.08 0.70 7.95 3.39 0.92 10.32 0.70 115.46 1.20
Assets $500 Million-$1 Billion(4) 12.23 11.73 0.79 5.66 3.35 0.92 7.10 0.55 67.73 0.57
Assets $250-$500 Million(4) 9.95 9.94 0.52 5.65 3.44 0.83 9.07 0.29 365.36 0.61
Assets less than $250 Million(10) 13.54 13.54 0.41 2.86 1.73 0.73 5.42 0.94 82.65 0.94
Goodwill Companies(9) 9.63 9.06 0.71 7.06 3.30 0.89 9.20 0.59 122.21 0.95
Non-Goodwill Companies(14) 12.60 12.60 0.46 3.81 2.35 0.78 6.58 0.72 186.39 0.83
MHC Institutions(23) 11.41 11.18 0.56 5.11 2.73 0.83 7.63 0.66 156.19 0.88
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Market Averages. MHC Institutions
- ---------------------------------
SAIF-Insured Thrifts(21) 24.00 168.91 19.23 174.23 22.91 0.66 2.95 54.10
BIF-Insured Thrifts(2) 19.92 191.16 21.69 191.16 25.00 0.52 2.39 50.38
NASDAQ Listed OTC Companies(23) 23.32 170.08 19.47 175.12 23.03 0.65 2.89 53.63
Florida Companies(3) 25.05 187.52 17.24 191.12 20.95 1.03 3.62 72.54
Mid-Atlantic Companies(10) 26.56 169.93 20.08 179.20 24.15 0.39 2.05 42.09
Mid-West Companies(7) 16.79 161.15 18.77 161.41 22.44 0.70 3.65 68.88
New England Companies(1) 19.92 0.00 21.45 0.00 25.00 0.67 2.53 50.38
South-East Companies(1) 0.00 172.68 22.95 172.68 24.11 1.40 4.12 0.00
Thrift Strategy(21) 24.00 170.08 19.37 175.12 22.91 0.64 2.91 54.10
Diversified Strategy(1) 19.92 0.00 21.45 0.00 25.00 0.67 2.53 50.38
Companies Issuing Dividends(22) 23.32 171.91 19.37 177.23 23.03 0.68 3.04 61.29
Companies Without Dividends(1) 0.00 137.12 21.46 137.12 0.00 0.00 0.00 0.00
Equity/Assets 6-12%(15) 23.17 176.38 16.52 182.99 21.41 0.64 2.77 64.56
Equity/Assets greater than 12%(8) 24.11 159.29 24.96 161.64 26.00 0.66 3.11 20.83
Actively Traded Companies(1) 0.00 211.54 19.45 238.72 22.54 0.48 1.75 69.57
Holding Company Structure(1) 0.00 211.54 19.45 238.72 22.54 0.48 1.75 69.57
Assets Over $1 Billion(5) 23.83 204.11 18.60 223.18 22.29 0.69 2.39 62.41
Assets $500 Million-$1 Billion(4) 25.83 166.78 20.47 172.76 24.36 0.68 3.13 41.67
Assets $250-$500 Million(4) 16.79 163.42 16.14 163.80 19.78 0.69 3.33 68.88
Assets less than $250 Million(10) 0.00 157.64 21.31 157.64 25.57 0.58 2.90 0.00
Goodwill Companies(9) 23.90 191.26 18.96 204.94 23.20 0.63 2.44 60.31
Non-Goodwill Companies(14) 22.17 157.73 19.82 157.73 22.88 0.65 3.20 33.58
MHC Institutions(23) 23.32 170.08 19.47 175.12 23.03 0.65 2.89 53.63
</TABLE>
(1) Average of high/low or bid/ask price per share.
(2) Or since offering price if converted or first listed in 1994 or 1995.
Percent change figures are actual year-to-date and are not annualized
(3) EPS (earnings per share) is based on actual trailing twelve month data and
is not shown on a pro forma basis.
(4) Excludes intangibles (such as goodwill, value of core deposits, etc.).
(5) ROA (return on assets) and ROE (return on equity) are indicated ratios
based on trailing twelve month common earnings and average common equity
and assets balances; ROI (return on investment) is current EPS divided by
current price.
(6) Annualized, based on last regular quarterly cash dividend announcement.
(7) Indicated dividend as a percent of trailing twelve month earnings.
(8) Excluded from averages due to actual or rumored acquisition activities or
unusual operating characteristics.
* All thrifts are SAIF insured unless otherwise noted with an asterisk.
Parentheses following market averages indicate the number of institutions
included in the respective averages. All figures have been adjusted for
stock splits, stock dividends, and secondary offerings.
Source: Corporate reports and offering circulars for publicly traded companies,
and RP Financial, Inc. calculations. The information provided in this
report has been obtained from sources we believe are reliable, but we
cannot guarantee the accuracy or completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 196
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA 3.94 3.32 0.28 6.87 2.88 0.57 13.69 2.06 38.66 1.24
CSA Coast Savings Financial of CA 4.96 4.89 0.16 3.19 1.57 0.50 10.09 1.34 71.08 1.37
CFB Commercial Federal Corp. of NE 5.92 5.27 0.64 10.83 5.10 0.91 15.46 1.01 70.94 0.96
DME Dime Bancorp, Inc. of NY* 5.71 5.65 0.57 10.83 5.91 0.73 13.89 2.36 23.73 0.94
DSL Downey Financial Corp. of CA 7.30 7.19 0.45 5.74 3.91 0.76 9.71 1.11 50.35 0.62
FRC First Republic Bancorp of CA* 7.41 7.41 0.66 10.88 5.80 0.58 9.66 1.28 65.82 0.95
FED FirstFed Fin. Corp. of CA 4.73 4.66 0.24 5.24 2.79 0.48 10.42 1.74 110.91 2.53
GLN Glendale Fed. Bk, FSB of CA 5.66 5.26 0.22 3.99 2.42 0.55 10.01 1.66 64.79 1.45
GDW Golden West Fin. Corp. of CA 6.26 6.26 1.01 15.84 8.62 1.24 19.40 1.44 37.62 0.68
GPT GreenPoint Fin. Corp. of NY* 10.80 6.19 1.05 9.89 5.08 0.96 9.03 2.84 28.16 1.36
WES Westcorp Inc. of Orange CA 9.39 9.36 0.99 10.57 6.75 0.39 4.18 1.02 115.45 2.20
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* 17.81 17.81 0.31 2.70 1.33 0.33 2.79 0.51 192.62 1.37
BKC American Bank of Waterbury CT* 7.97 7.62 1.27 15.17 7.87 1.10 13.16 1.97 44.68 1.43
BFD BostonFed Bancorp of MA 8.90 8.59 0.48 4.34 3.35 0.65 5.97 0.63 91.43 0.71
CFX CFX Corp of NH* 7.67 7.15 0.90 10.54 4.91 1.13 13.27 0.61 147.62 1.34
CZF Citisave Fin. Corp. of LA(8) 16.62 16.62 0.50 3.00 1.98 0.77 4.58 0.20 46.05 0.15
CBK Citizens First Fin.Corp. of IL 14.64 14.64 0.27 1.97 1.55 0.58 4.18 0.54 35.90 0.24
ESX Essex Bancorp of VA(8) 0.07 -0.05 -3.47 NM NM -1.73 NM 3.23 40.63 1.50
FCB Falmouth Co-Op Bank of MA* 24.45 24.45 0.85 3.46 3.18 0.82 3.32 0.02 NA 1.06
FAB FirstFed America Bancorp of MA 12.47 12.47 -0.27 -3.69 -1.58 0.42 5.80 NA NA 1.06
GAF GA Financial Corp. of PA 17.26 17.08 1.07 5.21 4.23 1.35 6.57 0.12 136.73 0.48
KNK Kankakee Bancorp of IL 10.68 10.00 0.61 5.97 4.91 0.78 7.67 1.06 64.54 1.01
KYF Kentucky First Bancorp of KY 16.11 16.11 0.80 3.99 4.47 1.06 5.27 0.14 295.31 0.77
NYB New York Bancorp, Inc. of NY 5.06 5.06 1.31 24.82 6.12 1.55 29.23 1.29 48.39 1.01
PDB Piedmont Bancorp of NC 16.97 16.97 -0.31 -1.27 -1.29 0.79 3.28 0.91 71.22 0.80
PLE Pinnacle Bank of AL 7.73 7.48 0.58 7.39 4.94 0.88 11.08 1.53 39.16 0.87
SSB Scotland Bancorp of NC 36.68 36.68 1.46 4.01 3.47 1.78 4.88 NA NA 0.50
SZB SouthFirst Bancshares of AL 13.98 13.98 0.05 0.31 0.30 0.27 1.89 0.64 44.97 0.40
SRN Southern Banc Company of AL 16.90 16.72 0.15 0.82 0.83 0.51 2.77 NA NA NA
SSM Stone Street Bancorp of NC 35.85 35.85 1.67 4.76 4.63 1.94 5.52 0.18 274.87 0.62
TSH Teche Holding Company of LA 13.30 13.30 0.73 5.04 4.32 1.01 6.94 0.27 303.33 0.97
FTF Texarkana Fst. Fin. Corp of AR 16.03 16.03 1.39 7.82 6.21 1.73 9.72 0.47 144.57 0.82
THR Three Rivers Fin. Corp. of MI 13.76 13.76 0.57 3.94 3.70 0.82 5.68 1.21 44.02 0.80
TBK Tolland Bank of CT* 6.73 6.52 0.69 10.81 7.40 0.75 11.61 2.31 52.07 1.95
WSB Washington SB, FSB of MD 8.30 8.30 0.50 6.00 4.80 0.73 8.80 NA NA 0.92
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN 7.97 7.79 0.24 2.95 3.01 0.03 0.42 0.71 51.00 0.55
AFED AFSALA Bancorp, Inc. of NY 13.68 13.68 0.59 4.34 3.87 0.59 4.34 NA NA NA
ALBK ALBANK Fin. Corp. of Albany NY 9.20 7.98 0.81 8.74 5.62 1.01 10.91 0.92 78.02 0.98
AMFC AMB Financial Corp. of IN 16.30 16.30 0.69 3.72 3.73 0.87 4.67 0.58 64.22 0.50
ASBP ASB Financial Corp. of OH 15.73 15.73 0.60 3.01 3.22 0.88 4.40 1.58 50.98 1.23
ABBK Abington Savings Bank of MA(8)* 6.87 6.16 0.77 11.55 6.83 0.67 10.04 0.30 133.04 0.64
AABC Access Anytime Bancorp of NM 6.80 6.80 -0.59 -11.49 -9.31 -0.23 -4.44 1.59 26.80 0.94
AFBC Advance Fin. Bancorp of WV 15.45 15.45 0.39 3.45 2.19 0.79 7.00 0.37 89.84 0.40
AADV Advantage Bancorp of WI 8.83 8.19 0.35 3.80 2.73 0.86 9.43 0.56 102.27 1.01
AFCB Affiliated Comm BC, Inc of MA 9.77 9.71 0.93 9.45 6.17 1.07 10.81 0.46 163.49 1.19
ALBC Albion Banc Corp. of Albion NY 8.90 8.90 0.09 0.93 0.92 0.38 3.93 NA NA 0.65
ABCL Allied Bancorp of IL 9.31 9.19 0.42 4.88 2.10 0.71 8.21 0.18 236.73 0.50
ATSB AmTrust Capital Corp. of IN 10.17 10.06 0.29 2.88 3.20 0.19 1.87 2.84 23.48 0.93
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NYSE Traded Companies
- ---------------------
AHM Ahmanson and Co. H.F. of CA NM NM 10.07 NM 17.43 0.88 1.75 60.69
CSA Coast Savings Financial of CA NM 198.55 9.84 201.38 20.16 0.00 0.00 0.00
CFB Commercial Federal Corp. of NE 19.60 205.37 12.16 230.77 13.73 0.28 0.72 14.07
DME Dime Bancorp, Inc. of NY* 16.92 176.57 10.08 178.33 13.19 0.00 0.00 0.00
DSL Downey Financial Corp. of CA 25.60 143.52 10.48 145.66 15.14 0.32 1.49 38.10
FRC First Republic Bancorp of CA* 17.25 146.71 10.88 146.79 19.44 0.00 0.00 0.00
FED FirstFed Fin. Corp. of CA NM 184.31 8.71 186.73 18.02 0.00 0.00 0.00
GLN Glendale Fed. Bk, FSB of CA NM 155.23 8.78 166.89 16.48 0.00 0.00 0.00
GDW Golden West Fin. Corp. of CA 11.60 178.66 11.19 178.66 9.48 0.44 0.58 6.72
GPT GreenPoint Fin. Corp. of NY* 19.70 198.84 21.48 NM 21.59 1.00 1.58 31.15
WES Westcorp Inc. of Orange CA 14.82 156.59 14.71 157.11 NM 0.40 2.09 31.01
AMEX Traded Companies
- ---------------------
ANA Acadiana Bancshares of LA* NM 126.16 22.47 126.16 NM 0.36 1.66 NM
BKC American Bank of Waterbury CT* 12.71 188.18 15.01 196.87 14.65 1.44 3.75 47.68
BFD BostonFed Bancorp of MA 29.88 136.09 12.12 141.00 21.73 0.28 1.46 43.75
CFX CFX Corp of NH* 20.37 186.05 14.27 199.58 16.19 0.88 4.65 NM
CZF Citisave Fin. Corp. of LA(8) NM 156.37 25.99 156.37 NM 0.40 1.98 NM
CBK Citizens First Fin.Corp. of IL NM 113.04 16.55 113.04 NM 0.00 0.00 0.00
ESX Essex Bancorp of VA(8) NM NM 0.95 NM NM 0.00 0.00 NM
FCB Falmouth Co-Op Bank of MA* NM 107.91 26.39 107.91 NM 0.20 1.22 38.46
FAB FirstFed America Bancorp of MA NM 126.51 15.77 126.51 NM 0.00 0.00 NM
GAF GA Financial Corp. of PA 23.62 132.19 22.81 133.55 18.75 0.40 2.20 51.95
KNK Kankakee Bancorp of IL 20.36 119.46 12.75 127.59 15.85 0.48 1.56 31.79
KYF Kentucky First Bancorp of KY 22.40 109.30 17.61 109.30 16.96 0.50 4.21 NM
NYB New York Bancorp, Inc. of NY 16.35 NM 20.18 NM 13.88 0.80 2.02 33.06
PDB Piedmont Bancorp of NC NM 148.70 25.23 148.70 NM 0.40 3.68 NM
PLE Pinnacle Bank of AL 20.24 147.06 11.37 151.97 13.49 0.80 3.14 63.49
SSB Scotland Bancorp of NC 28.85 115.50 42.37 115.50 23.69 0.30 1.89 54.55
SZB SouthFirst Bancshares of AL NM 105.06 14.69 105.06 NM 0.50 3.01 NM
SRN Southern Banc Company of AL NM 108.39 18.31 109.53 NM 0.35 2.24 NM
SSM Stone Street Bancorp of NC 21.59 103.14 36.97 103.14 18.58 0.45 2.11 45.45
TSH Teche Holding Company of LA 23.13 121.47 16.16 121.47 16.82 0.50 2.70 62.50
FTF Texarkana Fst. Fin. Corp of AR 16.11 137.01 21.96 137.01 12.97 0.56 2.72 43.75
THR Three Rivers Fin. Corp. of MI 27.05 108.41 14.91 108.41 18.75 0.36 2.18 59.02
TBK Tolland Bank of CT* 13.52 133.90 9.01 138.15 12.59 0.20 1.10 14.81
WSB Washington SB, FSB of MD 20.83 123.76 10.27 123.76 14.20 0.10 1.60 33.33
NASDAQ Listed OTC Companies
- ---------------------------
FBCV 1st Bancorp of Vincennes IN NM 97.05 7.73 99.25 NM 0.40 1.32 43.96
AFED AFSALA Bancorp, Inc. of NY 25.82 112.10 15.34 112.10 25.82 0.16 1.02 26.23
ALBK ALBANK Fin. Corp. of Albany NY 17.80 153.86 14.16 177.40 14.25 0.60 1.55 27.65
AMFC AMB Financial Corp. of IN 26.82 103.22 16.82 103.22 21.38 0.24 1.63 43.64
ASBP ASB Financial Corp. of OH NM 121.20 19.06 121.20 21.26 0.40 3.30 NM
ABBK Abington Savings Bank of MA(8)* 14.65 162.37 11.16 181.25 16.86 0.40 1.38 20.20
AABC Access Anytime Bancorp of NM NM 96.53 6.57 96.53 NM 0.00 0.00 NM
AFBC Advance Fin. Bancorp of WV NM 108.40 16.75 108.40 22.54 0.32 2.00 NM
AADV Advantage Bancorp of WI NM 141.48 12.50 152.69 14.74 0.40 1.01 37.04
AFCB Affiliated Comm BC, Inc of MA 16.21 147.24 14.38 148.17 14.16 0.48 2.04 33.10
ALBC Albion Banc Corp. of Albion NY NM 101.61 9.05 101.61 25.81 0.31 1.29 NM
ABCL Allied Bancorp of IL NM 130.83 12.19 132.57 28.30 0.65 2.17 NM
ATSB AmTrust Capital Corp. of IN NM 91.04 9.26 92.05 NM 0.20 1.60 50.00
</TABLE>
<PAGE> 197
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AHCI Ambanc Holding Co., Inc. of NY* 12.72 12.72 -0.62 -4.16 -4.06 -0.62 -4.16 1.06 72.94 1.47
ASBI Ameriana Bancorp of IN 10.85 10.84 0.60 5.40 3.95 0.86 7.77 0.43 63.58 0.38
AFFFZ America First Fin. Fund of CA(8) 8.28 8.16 1.42 19.23 13.51 1.74 23.53 0.41 80.65 0.50
AMFB American Federal Bank of SC(8) 8.99 8.38 1.10 13.34 3.84 1.37 16.50 0.44 193.22 1.30
ANBK American Nat'l Bancorp of MD(8) 9.15 9.15 0.15 1.44 0.98 0.54 5.14 NA NA 1.17
ABCW Anchor Bancorp Wisconsin of WI 6.25 6.13 0.76 12.01 6.02 0.99 15.68 0.75 161.56 1.53
ANDB Andover Bancorp, Inc. of MA* 8.07 8.07 1.09 14.05 8.37 1.13 14.50 1.14 89.41 1.41
ASFC Astoria Financial Corp. of NY 7.60 6.32 0.52 6.53 3.82 0.77 9.67 0.52 35.00 0.50
AVND Avondale Fin. Corp. of IL 8.25 8.25 -0.71 -7.35 -8.87 -1.34 -13.86 1.66 194.88 5.35
BKCT Bancorp Connecticut of CT* 10.40 10.40 1.26 11.92 7.51 1.20 11.39 1.11 108.02 1.98
BPLS Bank Plus Corp. of CA 4.92 4.91 -0.35 -6.90 -5.36 -0.04 -0.77 3.22 49.87 1.96
BWFC Bank West Fin. Corp. of MI 15.30 15.30 0.74 4.25 4.37 0.53 3.03 0.03 458.70 0.20
BANC BankAtlantic Bancorp of FL 5.50 4.48 0.93 14.39 7.93 0.71 11.01 0.78 120.47 1.40
BKUNA BankUnited SA of FL 4.46 3.59 0.18 3.57 2.14 0.35 6.97 0.74 26.73 0.24
BKCO Bankers Corp. of NJ(8)* 7.78 7.66 1.10 13.28 7.03 1.18 14.19 1.20 23.83 0.46
BVCC Bay View Capital Corp. of CA 6.31 6.00 0.38 6.13 3.61 0.64 10.37 0.79 115.33 1.20
BFSB Bedford Bancshares of VA 14.32 14.32 1.05 7.12 4.94 1.35 9.09 0.63 77.52 0.57
BFFC Big Foot Fin. Corp. of IL 16.98 16.98 0.05 0.28 0.24 0.42 2.45 0.09 151.52 0.34
BSBC Branford SB of CT* 9.54 9.54 1.14 12.65 6.44 1.11 12.24 1.94 112.22 3.09
BYFC Broadway Fin. Corp. of CA 10.87 10.87 -0.24 -2.42 -2.88 0.12 1.25 2.42 41.50 1.19
CBCO CB Bancorp of Michigan City IN(8) 8.83 8.83 1.00 10.68 5.14 1.17 12.50 2.90 27.47 1.98
CBES CBES Bancorp of MO 18.39 18.39 0.77 5.22 3.94 0.96 6.51 0.77 54.05 0.46
CCFH CCF Holding Company of GA 14.32 14.32 0.26 1.47 1.50 0.43 2.41 0.34 189.90 0.79
CENF CENFED Financial Corp. of CA 5.10 5.09 0.49 9.61 5.34 0.72 14.11 1.40 51.06 1.03
CFSB CFSB Bancorp of Lansing MI 7.63 7.63 0.75 9.50 4.44 1.00 12.75 0.10 565.80 0.62
CKFB CKF Bancorp of Danville KY 23.68 23.68 1.31 5.12 4.36 1.29 5.05 1.48 12.02 0.20
CNSB CNS Bancorp of MO 24.82 24.82 0.53 2.41 1.84 0.81 3.66 0.45 80.36 0.57
CSBF CSB Financial Group Inc of IL* 25.56 24.11 0.54 2.08 2.04 0.82 3.16 0.74 41.29 0.53
CBCI Calumet Bancorp of Chicago IL 15.94 15.94 1.11 6.86 6.53 1.44 8.87 1.40 84.90 1.54
CAFI Camco Fin. Corp. of OH 9.69 8.91 0.75 8.51 5.12 0.88 10.05 0.68 38.86 0.32
CMRN Cameron Fin. Corp. of MO 22.95 22.95 1.12 4.46 4.43 1.39 5.56 0.60 135.41 0.95
CAPS Capital Savings Bancorp of MO 8.66 8.66 0.65 7.16 4.53 0.92 10.23 0.26 116.53 0.38
CFNC Carolina Fincorp of NC* 23.71 23.71 1.11 4.65 4.23 1.05 4.36 0.28 133.67 0.54
CNY Carver Bancorp, Inc. of NY 8.06 7.72 -0.47 -5.07 -6.20 -0.03 -0.33 1.53 34.62 1.12
CASB Cascade SB of Everett WA(8) 6.17 6.17 0.46 7.48 4.98 0.58 9.45 0.59 142.60 1.02
CATB Catskill Fin. Corp. of NY* 26.98 26.98 1.42 6.14 5.25 1.44 6.22 0.50 133.79 1.47
CNIT Cenit Bancorp of Norfolk VA 7.02 6.40 0.74 10.48 6.40 0.68 9.75 0.65 85.28 0.87
CEBK Central Co-Op. Bank of MA* 10.45 9.31 0.88 8.78 7.02 0.90 8.90 NA NA 1.23
CENB Century Bancshares of NC* 29.93 29.93 1.76 5.86 5.94 1.78 5.93 0.39 139.39 0.91
CBSB Charter Financial Inc. of IL 14.13 12.40 0.97 5.94 4.60 1.22 7.50 0.51 114.56 0.80
COFI Charter One Financial of OH 6.78 6.30 0.97 14.40 5.29 1.23 18.29 0.32 147.01 0.77
CNBA Chester Bancorp of IL 22.21 22.21 1.09 4.90 4.73 1.09 4.90 0.25 107.12 0.70
CVAL Chester Valley Bancorp of PA 8.56 8.56 0.63 7.00 4.22 0.92 10.30 0.47 187.15 1.10
CTZN CitFed Bancorp of Dayton OH 6.33 5.64 0.55 8.47 4.28 0.79 12.27 0.45 128.08 0.99
CLAS Classic Bancshares of KY 14.72 12.42 0.56 3.08 3.16 0.77 4.25 0.80 76.14 0.97
CMSB Cmnwealth Bancorp of PA 9.56 7.35 0.56 5.51 4.16 0.72 7.00 0.42 106.34 0.86
COVB CoVest Bancshares of IL 8.94 8.51 0.16 1.78 1.42 0.43 4.89 0.23 118.11 0.43
CBSA Coastal Bancorp of Houston TX 3.42 2.89 0.26 7.88 4.95 0.44 13.16 0.65 37.23 0.56
CFCP Coastal Fin. Corp. of SC 6.10 6.10 0.90 14.66 3.42 0.99 16.14 0.26 350.59 1.14
COFD Collective Bancorp Inc. of NJ(8) 7.00 6.33 0.95 13.58 5.19 1.15 16.46 0.40 60.69 0.47
CMSV Commty. Svgs, MHC of FL (48.5) 11.23 11.23 0.63 5.41 3.63 0.95 8.21 0.57 66.20 0.64
CBNH Community Bankshares Inc of NH(8)* 7.13 7.13 0.93 13.02 5.23 0.75 10.52 0.61 115.48 1.01
CFTP Community Fed. Bancorp of MS 33.52 33.52 1.43 4.31 3.70 1.70 5.13 0.35 79.45 0.47
CFFC Community Fin. Corp. of VA 13.78 13.78 1.04 7.52 5.76 1.31 9.47 0.35 180.62 0.70
CFBC Community First Bnkg Co. of GA 16.42 16.42 0.25 1.52 1.21 0.49 2.96 NA NA NA
CIBI Community Inv. Bancorp of OH 11.51 11.51 0.67 5.51 4.98 1.00 8.19 0.72 65.53 0.62
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
AHCI Ambanc Holding Co., Inc. of NY* NM 115.52 14.70 115.52 NM 0.00 0.00 NM
ASBI Ameriana Bancorp of IN 25.34 138.27 15.00 138.37 17.62 0.60 3.24 NM
AFFFZ America First Fin. Fund of CA(8) 7.40 130.93 10.84 132.83 6.05 1.60 4.06 30.08
AMFB American Federal Bank of SC(8) 26.01 NM 29.65 NM 21.03 0.48 1.37 35.56
ANBK American Nat'l Bancorp of MD(8) NM 156.61 14.34 156.61 28.40 0.12 0.62 63.16
ABCW Anchor Bancorp Wisconsin of WI 16.61 196.27 12.27 200.16 12.72 0.56 1.11 18.42
ANDB Andover Bancorp, Inc. of MA* 11.95 158.86 12.81 158.86 11.58 0.68 2.26 26.98
ASFC Astoria Financial Corp. of NY 26.19 168.27 12.79 202.24 17.69 0.60 1.28 33.52
AVND Avondale Fin. Corp. of IL NM 92.41 7.63 92.41 NM 0.00 0.00 NM
BKCT Bancorp Connecticut of CT* 13.31 159.13 16.55 159.13 13.93 0.88 3.29 43.78
BPLS Bank Plus Corp. of CA NM 132.32 6.51 132.62 NM 0.00 0.00 NM
BWFC Bank West Fin. Corp. of MI 22.88 106.97 16.37 106.97 NM 0.28 2.07 47.46
BANC BankAtlantic Bancorp of FL 12.61 170.79 9.40 209.84 16.48 0.12 0.83 10.43
BKUNA BankUnited SA of FL NM 133.83 5.97 166.55 23.93 0.00 0.00 0.00
BKCO Bankers Corp. of NJ(8)* 14.22 181.48 14.12 184.48 13.30 0.64 2.21 31.37
BVCC Bay View Capital Corp. of CA 27.72 176.08 11.11 185.22 16.39 0.32 1.23 34.04
BFSB Bedford Bancshares of VA 20.26 142.51 20.41 142.51 15.88 0.56 2.38 48.28
BFFC Big Foot Fin. Corp. of IL NM 118.55 20.13 118.55 NM 0.00 0.00 0.00
BSBC Branford SB of CT* 15.52 186.43 17.78 186.43 16.03 0.08 1.66 25.81
BYFC Broadway Fin. Corp. of CA NM 75.39 8.20 75.39 NM 0.20 1.86 NM
CBCO CB Bancorp of Michigan City IN(8) 19.46 198.90 17.57 198.90 16.63 0.00 0.00 0.00
CBES CBES Bancorp of MO 25.36 102.46 18.84 102.46 20.35 0.40 2.29 57.97
CCFH CCF Holding Company of GA NM 115.50 16.54 115.50 NM 0.55 3.31 NM
CENF CENFED Financial Corp. of CA 18.72 171.68 8.76 172.03 12.76 0.36 1.05 19.57
CFSB CFSB Bancorp of Lansing MI 22.54 214.04 16.33 214.04 16.80 0.60 2.28 51.28
CKFB CKF Bancorp of Danville KY 22.92 125.16 29.64 125.16 23.19 0.50 2.60 59.52
CNSB CNS Bancorp of MO NM 114.53 28.42 114.53 NM 0.20 1.19 64.52
CSBF CSB Financial Group Inc of IL* NM 90.27 23.07 95.70 NM 0.00 0.00 0.00
CBCI Calumet Bancorp of Chicago IL 15.31 108.20 17.25 108.20 11.84 0.00 0.00 0.00
CAFI Camco Fin. Corp. of OH 19.54 129.00 12.50 140.23 16.55 0.49 2.67 52.13
CMRN Cameron Fin. Corp. of MO 22.56 102.66 23.57 102.66 18.09 0.28 1.61 36.36
CAPS Capital Savings Bancorp of MO 22.08 156.11 13.52 156.11 15.45 0.24 1.41 31.17
CFNC Carolina Fincorp of NC* 23.65 110.42 26.18 110.42 25.20 0.20 1.30 30.77
CNY Carver Bancorp, Inc. of NY NM 82.99 6.69 86.69 NM 0.20 1.63 NM
CASB Cascade SB of Everett WA(8) 20.08 144.63 8.93 144.63 15.91 0.00 0.00 0.00
CATB Catskill Fin. Corp. of NY* 19.05 108.84 29.36 108.84 18.82 0.28 1.75 33.33
CNIT Cenit Bancorp of Norfolk VA 15.62 163.64 11.48 179.48 16.78 1.00 2.02 31.55
CEBK Central Co-Op. Bank of MA* 14.24 120.09 12.55 134.87 14.04 0.32 1.56 22.22
CENB Century Bancshares of NC* 16.82 98.63 29.52 98.63 16.63 2.00 2.76 46.40
CBSB Charter Financial Inc. of IL 21.73 138.05 19.51 157.33 17.22 0.32 1.75 38.10
COFI Charter One Financial of OH 18.90 NM 17.97 NM 14.88 1.00 1.83 34.60
CNBA Chester Bancorp of IL 21.13 103.45 22.97 103.45 21.13 0.24 1.60 33.80
CVAL Chester Valley Bancorp of PA 23.70 162.11 13.88 162.11 16.11 0.44 2.13 50.57
CTZN CitFed Bancorp of Dayton OH 23.36 190.46 12.06 213.83 16.13 0.32 0.78 18.18
CLAS Classic Bancshares of KY NM 97.14 14.30 115.11 22.98 0.28 1.96 62.22
CMSB Cmnwealth Bancorp of PA 24.06 128.86 12.33 167.74 18.96 0.28 1.74 41.79
COVB CoVest Bancshares of IL NM 133.31 11.91 139.90 25.66 0.40 1.83 NM
CBSA Coastal Bancorp of Houston TX 20.21 153.44 5.25 181.66 12.10 0.48 1.59 32.21
CFCP Coastal Fin. Corp. of SC 29.21 NM 24.88 NM 26.53 0.36 1.38 40.45
COFD Collective Bancorp Inc. of NJ(8) 19.26 NM 17.52 NM 15.89 1.00 2.12 40.82
CMSV Commty. Svgs, MHC of FL (48.5) 27.55 146.89 16.49 146.89 18.15 0.90 3.94 NM
CBNH Community Bankshares Inc of NH(8)* 19.11 236.61 16.87 236.61 23.66 0.64 1.61 30.77
CFTP Community Fed. Bancorp of MS 27.01 113.89 38.18 113.89 22.68 0.30 1.63 44.12
CFFC Community Fin. Corp. of VA 17.37 126.32 17.40 126.32 13.79 0.56 2.46 42.75
CFBC Community First Bnkg Co. of GA NM 125.85 20.66 125.85 NM 0.00 0.00 0.00
CIBI Community Inv. Bancorp of OH 20.08 112.10 12.90 112.10 13.52 0.32 2.42 48.48
</TABLE>
<PAGE> 198
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
COOP Cooperative Bk.for Svgs. of NC 7.49 7.49 -0.89 -10.79 -7.54 0.13 1.60 0.45 53.51 0.30
CRZY Crazy Woman Creek Bncorp of WY 27.84 27.84 1.02 3.37 3.82 1.28 4.24 0.23 240.34 1.03
DNFC D&N Financial Corp. of MI 5.81 5.74 0.63 10.92 5.56 0.85 14.80 0.37 192.28 1.01
DFIN Damen Fin. Corp. of Chicago IL 20.16 20.16 0.71 3.13 3.61 0.89 3.93 0.20 76.94 0.38
DCBI Delphos Citizens Bancorp of OH 28.34 28.34 1.27 6.07 3.79 1.27 6.07 0.10 93.46 0.13
DIME Dime Community Bancorp of NY 15.41 13.23 0.93 6.19 4.52 1.03 6.90 0.82 97.78 1.45
DIBK Dime Financial Corp. of CT* 7.83 7.54 1.85 22.66 9.94 1.91 23.35 0.46 337.58 3.23
EGLB Eagle BancGroup of IL 12.10 12.10 -0.20 -1.89 -1.56 0.12 1.09 1.67 31.93 0.80
EBSI Eagle Bancshares of Tucker GA 8.71 8.71 0.59 6.82 4.38 0.80 9.29 0.88 65.80 0.84
EGFC Eagle Financial Corp. of CT 6.90 5.19 0.58 8.18 5.87 0.78 10.92 1.21 47.66 1.01
ETFS East Texas Fin. Serv. of TX 19.02 19.02 0.32 1.70 1.88 0.64 3.41 0.25 100.00 0.53
EMLD Emerald Financial Corp of OH 7.51 7.38 0.69 8.89 5.22 0.89 11.37 0.34 75.41 0.34
EIRE Emerald Island Bancorp, MA* 6.96 6.96 0.81 11.98 7.14 0.86 12.66 0.62 105.23 0.97
EFBC Empire Federal Bancorp of MT 34.89 34.89 0.83 2.37 2.44 1.09 3.12 NA NA 0.47
EFBI Enterprise Fed. Bancorp of OH 12.67 12.65 0.68 4.72 4.11 0.75 5.16 0.01 NA 0.28
EQSB Equitable FSB of Wheaton MD 5.07 5.07 0.48 9.33 5.71 0.76 14.93 1.07 19.82 0.31
FFFG F.F.O. Financial Group of FL(8) 6.41 6.41 0.52 8.41 4.00 0.85 13.72 3.17 55.02 2.47
FCBF FCB Fin. Corp. of Neenah WI 17.49 17.49 0.92 5.19 3.67 1.08 6.14 0.15 347.77 0.62
FFBS FFBS Bancorp of Columbus MS 19.42 19.42 1.19 6.07 3.69 1.49 7.65 0.42 109.44 0.66
FFDF FFD Financial Corp. of OH 24.74 24.74 0.78 3.42 2.98 1.08 4.74 NA NA 0.27
FFLC FFLC Bancorp of Leesburg FL 14.48 14.48 0.69 4.30 3.71 1.01 6.30 0.27 116.25 0.46
FFFC FFVA Financial Corp. of VA 12.98 12.69 1.08 7.35 4.68 1.34 9.09 0.10 585.64 1.01
FFWC FFW Corporation of Wabash IN 10.01 10.01 0.90 8.74 7.01 1.11 10.86 0.22 150.42 0.48
FFYF FFY Financial Corp. of OH 14.10 14.10 0.89 5.44 4.64 1.27 7.80 0.72 73.17 0.69
FMCO FMS Financial Corp. of NJ 6.29 6.16 0.64 9.90 4.95 0.97 15.10 1.07 47.56 0.90
FFHH FSF Financial Corp. of MN 11.77 11.77 0.64 4.73 4.09 0.83 6.11 0.10 216.04 0.34
FOBC Fed One Bancorp of Wheeling WV 11.61 11.06 0.69 5.80 4.66 0.98 8.26 0.45 93.85 1.00
FBCI Fidelity Bancorp of Chicago IL 10.19 10.16 0.53 4.92 4.37 0.75 7.05 0.70 24.69 0.23
FSBI Fidelity Bancorp, Inc. of PA 6.96 6.96 0.52 7.41 5.35 0.83 11.77 0.51 100.48 1.06
FFFL Fidelity FSB, MHC of FL (47.4) 8.82 8.75 0.39 4.09 2.28 0.62 6.51 0.30 77.48 0.31
FFED Fidelity Fed. Bancorp of IN 5.14 5.14 0.16 3.18 1.94 0.28 5.62 0.16 455.75 0.85
FFOH Fidelity Financial of OH 13.12 11.52 0.63 3.90 2.67 1.01 6.24 0.18 174.34 0.38
FIBC Financial Bancorp, Inc. of NY 9.73 9.68 0.51 5.14 4.11 0.95 9.49 2.77 16.97 0.85
FBSI First Bancshares of MO 14.35 14.33 0.91 5.88 5.02 1.11 7.22 0.32 88.44 0.35
FBBC First Bell Bancorp of PA 10.20 10.20 1.19 7.34 6.39 1.40 8.65 0.09 107.87 0.12
FBER First Bergen Bancorp of NJ 16.44 16.44 0.42 2.50 2.19 0.75 4.50 0.74 161.82 2.41
SKBO First Carnegie,MHC of PA(45.0) 15.65 15.65 0.37 2.35 1.71 0.54 3.43 0.74 33.56 0.66
FCIT First Cit. Fin. Corp of MD(8) 6.11 6.11 0.53 8.65 3.59 0.79 13.02 1.92 52.05 1.33
FSTC First Citizens Corp of GA 9.37 7.37 1.79 19.12 8.77 1.50 16.01 1.26 87.96 1.40
FFBA First Colorado Bancorp of Co 14.30 14.13 1.13 7.87 5.32 1.12 7.80 0.19 136.49 0.37
FDEF First Defiance Fin.Corp. of OH 21.42 21.42 0.78 3.37 2.96 1.06 4.60 0.45 93.68 0.55
FESX First Essex Bancorp of MA* 7.31 6.30 1.01 13.37 7.21 0.88 11.68 0.62 143.10 1.42
FFES First FS&LA of E. Hartford CT 6.25 6.25 0.43 7.04 5.38 0.69 11.23 0.51 55.25 1.57
FFSX First FS&LA. MHC of IA (46.0) 8.14 8.06 0.43 5.19 3.02 0.73 8.93 0.14 263.34 0.52
FFSW First Fed Fin. Serv. of OH 6.05 5.11 0.87 15.36 4.90 0.69 12.15 0.38 73.66 0.40
BDJI First Fed. Bancorp. of MN 11.17 11.17 0.32 2.58 2.31 0.66 5.38 0.31 127.79 0.82
FFBH First Fed. Bancshares of AR 15.82 15.82 0.79 5.42 3.81 1.13 7.76 0.19 127.62 0.31
FTFC First Fed. Capital Corp. of WI 6.36 5.96 0.74 11.32 5.12 0.86 13.15 0.17 308.37 0.68
FFKY First Fed. Fin. Corp. of KY 13.60 12.78 1.25 9.03 5.02 1.49 10.79 0.40 115.33 0.53
FFBZ First Federal Bancorp of OH 7.66 7.65 0.74 9.58 4.65 1.01 13.14 0.58 153.04 1.02
FFCH First Fin. Holdings Inc. of SC 6.15 6.15 0.55 8.85 4.35 0.84 13.43 1.82 39.24 0.84
FFBI First Financial Bancorp of IL 7.81 7.81 -0.02 -0.27 -0.27 0.47 5.76 0.27 200.40 0.69
FFHC First Financial Corp. of WI(8) 6.98 6.78 0.93 12.89 4.88 1.26 17.55 0.29 137.23 0.65
FFHS First Franklin Corp. of OH 8.82 8.75 0.14 1.59 1.35 0.62 6.76 0.62 68.29 0.62
FGHC First Georgia Hold. Corp of GA 8.49 7.74 0.96 11.69 6.71 0.57 6.97 1.35 50.33 0.79
FSPG First Home Bancorp of NJ 6.59 6.47 0.90 13.90 8.10 1.19 18.24 0.79 93.39 1.41
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
COOP Cooperative Bk.for Svgs. of NC NM 148.66 11.13 148.66 NM 0.00 0.00 NM
CRZY Crazy Woman Creek Bncorp of WY 26.15 93.08 25.91 93.08 20.76 0.40 2.83 74.07
DNFC D&N Financial Corp. of MI 17.99 177.58 10.32 179.57 13.28 0.00 0.00 0.00
DFIN Damen Fin. Corp. of Chicago IL 27.71 100.07 20.18 100.07 22.08 0.24 1.70 47.06
DCBI Delphos Citizens Bancorp of OH 26.40 110.01 31.18 110.01 26.40 0.00 0.00 0.00
DIME Dime Community Bancorp of NY 22.13 132.48 20.42 154.37 19.85 0.18 0.94 20.69
DIBK Dime Financial Corp. of CT* 10.06 211.52 16.55 219.48 9.76 0.40 1.52 15.33
EGLB Eagle BancGroup of IL NM 102.15 12.36 102.15 NM 0.00 0.00 NM
EBSI Eagle Bancshares of Tucker GA 22.81 143.25 12.47 143.25 16.74 0.60 3.29 75.00
EGFC Eagle Financial Corp. of CT 17.03 137.49 9.49 182.71 12.75 0.92 2.92 49.73
ETFS East Texas Fin. Serv. of TX NM 92.03 17.51 92.03 26.65 0.20 1.10 58.82
EMLD Emerald Financial Corp of OH 19.16 164.60 12.36 167.48 14.97 0.24 1.67 32.00
EIRE Emerald Island Bancorp, MA* 14.01 153.64 10.69 153.64 13.26 0.28 1.43 20.00
EFBC Empire Federal Bancorp of MT NM 97.36 33.97 97.36 NM 0.30 2.09 NM
EFBI Enterprise Fed. Bancorp of OH 24.33 117.59 14.90 117.74 22.26 1.00 5.48 NM
EQSB Equitable FSB of Wheaton MD 17.50 154.49 7.83 154.49 10.94 0.00 0.00 0.00
FFFG F.F.O. Financial Group of FL(8) 25.00 197.10 12.63 197.10 15.32 0.00 0.00 0.00
FCBF FCB Fin. Corp. of Neenah WI 27.27 140.26 24.53 140.26 23.08 0.72 2.67 72.73
FFBS FFBS Bancorp of Columbus MS 27.08 161.99 31.46 161.99 21.49 0.50 1.92 52.08
FFDF FFD Financial Corp. of OH NM 101.72 25.16 101.72 24.18 0.30 2.03 68.18
FFLC FFLC Bancorp of Leesburg FL 26.98 121.71 17.62 121.71 18.41 0.48 1.76 47.52
FFFC FFVA Financial Corp. of VA 21.35 171.86 22.30 175.76 17.27 0.48 1.77 37.80
FFWC FFW Corporation of Wabash IN 14.27 124.18 12.43 124.18 11.48 0.72 2.55 36.36
FFYF FFY Financial Corp. of OH 21.56 132.67 18.70 132.67 15.04 0.70 2.71 58.33
FMCO FMS Financial Corp. of NJ 20.21 195.47 12.29 199.58 13.26 0.20 0.70 14.18
FFHH FSF Financial Corp. of MN 24.47 126.13 14.85 126.13 18.95 0.50 2.84 69.44
FOBC Fed One Bancorp of Wheeling WV 21.46 125.44 14.56 131.66 15.07 0.58 2.73 58.59
FBCI Fidelity Bancorp of Chicago IL 22.86 113.42 11.56 113.74 15.97 0.32 1.59 36.36
FSBI Fidelity Bancorp, Inc. of PA 18.69 135.04 9.40 135.04 11.76 0.36 1.80 33.64
FFFL Fidelity FSB, MHC of FL (47.4) NM 177.98 15.69 179.47 27.56 0.80 3.72 NM
FFED Fidelity Fed. Bancorp of IN NM 169.25 8.70 169.25 29.17 0.40 4.57 NM
FFOH Fidelity Financial of OH NM 124.69 16.35 141.91 23.44 0.28 1.87 70.00
FIBC Financial Bancorp, Inc. of NY 24.35 125.17 12.18 125.75 13.20 0.40 2.13 51.95
FBSI First Bancshares of MO 19.92 118.69 17.03 118.87 16.21 0.20 0.85 16.95
FBBC First Bell Bancorp of PA 15.65 157.57 16.07 157.57 13.29 0.40 2.39 37.38
FBER First Bergen Bancorp of NJ NM 116.28 19.12 116.28 25.40 0.12 0.75 34.29
SKBO First Carnegie,MHC of PA(45.0) NM 137.12 21.46 137.12 NM 0.00 0.00 0.00
FCIT First Cit. Fin. Corp of MD(8) 27.83 230.16 14.05 230.16 18.50 0.00 0.00 0.00
FSTC First Citizens Corp of GA 11.41 218.13 20.44 NM 13.63 0.44 1.53 17.46
FFBA First Colorado Bancorp of Co 18.81 148.09 21.18 149.92 18.99 0.44 2.27 42.72
FDEF First Defiance Fin.Corp. of OH NM 119.82 25.66 119.82 24.78 0.32 2.15 72.73
FESX First Essex Bancorp of MA* 13.87 157.32 11.50 182.59 15.87 0.48 2.72 37.80
FFES First FS&LA of E. Hartford CT 18.59 126.09 7.88 126.09 11.65 0.60 2.07 38.46
FFSX First FS&LA. MHC of IA (46.0) NM 168.92 13.74 170.45 19.23 0.48 2.13 70.59
FFSW First Fed Fin. Serv. of OH 20.40 NM 17.29 NM 25.79 0.44 1.07 21.89
BDJI First Fed. Bancorp. of MN NM 120.85 13.50 120.85 20.75 0.00 0.00 0.00
FFBH First Fed. Bancshares of AR 26.23 126.56 20.02 126.56 18.32 0.20 0.94 24.69
FTFC First Fed. Capital Corp. of WI 19.54 216.53 13.76 231.06 16.83 0.48 2.08 40.68
FFKY First Fed. Fin. Corp. of KY 19.91 176.81 24.05 188.27 16.67 0.52 2.42 48.15
FFBZ First Federal Bancorp of OH 21.51 198.07 15.17 198.29 15.68 0.24 1.30 27.91
FFCH First Fin. Holdings Inc. of SC 22.96 199.10 12.24 199.10 15.12 0.72 2.32 53.33
FFBI First Financial Bancorp of IL NM 104.85 8.18 104.85 17.50 0.00 0.00 NM
FFHC First Financial Corp. of WI(8) 20.49 NM 18.39 NM 15.05 0.60 2.03 41.67
FFHS First Franklin Corp. of OH NM 118.13 10.41 118.98 17.39 0.32 1.60 NM
FGHC First Georgia Hold. Corp of GA 14.89 171.15 14.52 187.67 25.00 0.05 0.71 10.64
FSPG First Home Bancorp of NJ 12.34 162.78 10.72 165.73 9.40 0.40 1.99 24.54
</TABLE>
<PAGE> 199
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFSL First Independence Corp. of KS 10.51 10.51 0.50 4.27 4.56 0.76 6.53 0.90 69.84 0.97
FISB First Indiana Corp. of IN 9.58 9.46 0.89 9.68 5.60 1.03 11.14 1.55 85.76 1.59
FKFS First Keystone Fin. Corp of PA 7.07 7.07 0.51 6.65 5.17 0.76 9.86 2.46 34.36 1.46
FLKY First Lancaster Bncshrs of KY 34.23 34.23 1.15 3.72 3.02 1.40 4.52 0.75 32.89 0.29
FLFC First Liberty Fin. Corp. of GA 7.35 6.57 1.09 14.83 7.53 0.88 11.96 0.75 114.80 1.23
CASH First Midwest Fin. Corp. of IA 11.59 10.26 0.76 6.54 5.91 0.98 8.44 0.79 81.68 0.97
FMBD First Mutual Bancorp of IL 13.41 10.32 0.15 0.75 0.83 0.38 1.97 0.16 207.98 0.46
FMSB First Mutual SB of Bellevue WA* 6.57 6.57 1.01 15.31 7.03 0.98 14.78 NA NA 1.24
FNGB First Northern Cap. Corp of WI 11.51 11.51 0.60 5.05 3.24 0.89 7.48 0.13 368.77 0.54
FFPB First Palm Beach Bancorp of FL 6.76 6.59 -0.01 -0.09 -0.06 0.05 0.69 1.09 46.69 0.74
FSLA First SB SLA MHC of NJ (47.5) 9.19 8.15 0.51 5.44 2.51 0.90 9.61 0.58 93.31 1.05
FSNJ First SB of NJ, MHC (45.9)(8) 8.57 8.57 -0.34 -4.31 -2.09 0.23 2.89 0.87 58.25 1.21
SOPN First SB, SSB, Moore Co. of NC 24.60 24.60 1.39 5.48 4.45 1.67 6.58 0.12 192.97 0.32
FWWB First Savings Bancorp of WA* 15.14 15.14 1.06 5.65 3.45 1.01 5.37 0.32 210.94 1.03
SHEN First Shenango Bancorp of PA 10.70 10.70 0.83 7.07 5.59 1.12 9.49 0.50 144.74 1.14
FSFC First So.east Fin. Corp. of SC(8) 10.22 10.22 0.01 0.11 0.07 0.92 7.48 0.11 362.15 0.50
FBNW FirstBank Corp of Clarkston WA 18.04 18.04 0.70 3.86 3.13 0.57 3.14 NA NA NA
FSPT FirstSpartan Fin. Corp. of SC 26.32 26.32 0.95 3.62 2.73 1.11 4.20 NA NA NA
FLAG Flag Financial Corp of GA 9.40 9.40 -0.06 -0.68 -0.49 0.14 1.45 4.52 44.14 2.91
FFIC Flushing Fin. Corp. of NY* 16.01 16.01 0.90 5.16 4.25 0.93 5.34 0.27 251.62 1.28
FBHC Fort Bend Holding Corp. of TX 6.43 5.95 0.23 3.44 2.51 0.54 7.99 NA NA 0.95
FTSB Fort Thomas Fin. Corp. of KY 16.09 16.09 0.50 2.50 2.73 0.76 3.83 2.02 25.00 0.57
FKKY Frankfort First Bancorp of KY 26.19 26.19 0.62 2.19 2.67 0.93 3.29 0.06 138.89 0.08
FTNB Fulton Bancorp of MO 25.01 25.01 0.74 3.81 2.06 1.05 5.39 NA NA 1.01
GFSB GFS Bancorp of Grinnell IA 11.57 11.57 0.99 8.43 6.36 1.27 10.81 1.54 45.77 0.81
GUPB GFSB Bancorp of Gallup NM 16.30 16.30 0.74 3.86 3.49 0.93 4.86 NA NA 0.69
GSLA GS Financial Corp. of LA 46.34 46.34 0.85 1.84 1.88 0.85 1.84 0.13 214.61 0.85
GOSB GSB Financial Corp. of NY 27.06 27.06 1.02 3.77 3.53 0.86 3.19 NA NA NA
GWBC Gateway Bancorp of KY(8) 26.08 26.08 0.82 3.25 2.97 1.15 4.54 0.78 15.82 0.40
GBCI Glacier Bancorp of MT 9.56 9.29 1.39 14.68 5.26 1.57 16.59 0.28 212.30 0.85
GLBK Glendale Co-op. Bank of MA(8)* 16.37 16.37 0.75 4.64 4.11 0.72 4.47 NA NA 0.72
GFCO Glenway Financial Corp. of OH 9.56 9.41 0.38 3.95 3.54 0.68 7.17 0.32 84.04 0.32
GTPS Great American Bancorp of IL 21.16 21.16 0.43 1.95 1.96 0.55 2.48 0.16 188.02 0.42
GTFN Great Financial Corp. of KY 9.30 8.89 0.73 7.40 4.28 0.70 7.09 3.42 13.77 0.72
GSBC Great Southern Bancorp of MO 8.97 8.97 1.36 14.03 6.46 1.53 15.83 1.83 124.20 2.60
GDVS Greater DV SB,MHC of PA (19.9)* 11.47 11.47 0.01 0.12 0.06 0.33 2.81 2.78 43.72 2.05
GSFC Green Street Fin. Corp. of NC 36.09 36.09 1.33 4.48 3.19 1.64 5.50 0.14 97.92 0.19
GSLC Guaranty Svgs & Loan FA of VA 5.72 5.72 0.46 7.73 2.76 0.43 7.26 NA NA 1.00
GFED Guarnty FS&LA,MHC of MO (31.0)(8) 13.84 13.84 0.50 3.50 1.67 0.81 5.71 0.54 206.36 1.42
HCBB HCB Bancshares of AR 18.25 17.49 -0.11 -0.58 -0.58 0.39 2.11 NA NA 1.47
HEMT HF Bancorp of Hemet CA 9.81 0.00 -0.31 -2.63 -2.57 -2.27 -19.11 NA NA 1.10
HFFC HF Financial Corp. of SD 9.19 9.17 0.59 6.44 5.12 0.81 8.85 0.40 200.58 1.04
HFNC HFNC Financial Corp. of NC 18.83 18.83 1.07 3.82 3.14 1.41 5.01 0.99 94.51 1.26
HMNF HMN Financial, Inc. of MN 14.24 14.24 0.75 4.93 4.28 0.91 5.98 0.08 555.50 0.70
HALL Hallmark Capital Corp. of WI 6.99 6.99 0.45 6.30 5.33 0.60 8.30 0.02 NA 0.60
HARB Harbor FSB, MHC of FL (46.0) 8.22 7.91 0.93 11.11 4.44 1.22 14.62 0.47 216.59 1.38
HRBF Harbor Federal Bancorp of MD 12.86 12.86 0.43 3.20 2.68 0.68 5.15 0.13 131.49 0.26
HFSA Hardin Bancorp of Hardin MO 12.78 12.78 0.51 3.17 3.32 0.82 5.16 0.37 41.58 0.29
HARL Harleysville SA of PA 6.36 6.36 0.70 10.70 5.31 0.99 15.31 0.12 475.58 0.77
HARS Harris SB, MHC of PA (24.2) 7.92 6.83 0.25 2.68 1.53 0.60 6.55 0.70 61.77 0.98
HFFB Harrodsburg 1st Fin Bcrp of KY 26.35 26.35 1.03 3.73 3.55 1.36 4.95 0.47 58.12 0.37
HHFC Harvest Home Fin. Corp. of OH 12.43 12.43 0.21 1.35 1.45 0.54 3.49 0.15 90.48 0.26
HAVN Haven Bancorp of Woodhaven NY 5.80 5.77 0.62 10.26 6.12 0.91 14.94 0.78 84.95 1.23
HVFD Haverfield Corp. of OH(8) 8.39 8.39 0.49 5.94 3.38 1.03 12.55 1.00 87.44 1.00
HTHR Hawthorne Fin. Corp. of CA 3.88 3.88 0.75 19.32 18.38 0.52 13.34 NA NA 1.92
HMLK Hemlock Fed. Fin. Corp. of IL 18.29 18.29 -0.39 -2.85 -1.90 0.49 3.64 NA NA 1.37
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
FFSL First Independence Corp. of KS 21.92 101.75 10.69 101.75 14.35 0.25 2.15 47.17
FISB First Indiana Corp. of IN 17.86 166.54 15.96 168.67 15.52 0.48 2.13 38.10
FKFS First Keystone Fin. Corp of PA 19.35 132.45 9.37 132.45 13.04 0.20 0.83 16.13
FLKY First Lancaster Bncshrs of KY NM 105.61 36.15 105.61 27.23 0.50 3.28 NM
FLFC First Liberty Fin. Corp. of GA 13.28 196.88 14.47 220.06 16.46 0.40 1.71 22.73
CASH First Midwest Fin. Corp. of IA 16.93 107.05 12.41 121.00 13.10 0.36 2.22 37.50
FMBD First Mutual Bancorp of IL NM 102.69 13.77 133.48 NM 0.32 2.05 NM
FMSB First Mutual SB of Bellevue WA* 14.22 203.15 13.35 203.15 14.73 0.20 0.97 13.79
FNGB First Northern Cap. Corp of WI NM 155.38 17.88 155.38 20.83 0.64 2.56 NM
FFPB First Palm Beach Bancorp of FL NM 148.53 10.05 152.44 NM 0.60 1.92 NM
FSLA First SB SLA MHC of NJ (47.5) NM 211.54 19.45 238.72 22.54 0.48 1.75 69.57
FSNJ First SB of NJ, MHC (45.9)(8) NM 207.05 17.74 207.05 NM 0.50 1.49 NM
SOPN First SB, SSB, Moore Co. of NC 22.47 123.34 30.34 123.34 18.70 0.80 3.60 NM
FWWB First Savings Bancorp of WA* 29.01 167.14 25.30 167.14 NM 0.28 1.19 34.57
SHEN First Shenango Bancorp of PA 17.90 133.48 14.28 133.48 13.34 0.60 2.16 38.71
FSFC First So.east Fin. Corp. of SC(8) NM 185.90 19.01 185.90 20.71 0.24 1.66 NM
FBNW FirstBank Corp of Clarkston WA NM 123.21 22.22 123.21 NM 0.00 0.00 0.00
FSPT FirstSpartan Fin. Corp. of SC NM 132.54 34.89 132.54 NM 0.00 0.00 0.00
FLAG Flag Financial Corp of GA NM 140.20 13.18 140.20 NM 0.34 2.37 NM
FFIC Flushing Fin. Corp. of NY* 23.55 126.09 20.19 126.09 22.75 0.24 1.19 27.91
FBHC Fort Bend Holding Corp. of TX NM 135.45 8.71 146.40 17.15 0.28 0.95 37.84
FTSB Fort Thomas Fin. Corp. of KY NM 107.95 17.37 107.95 23.91 0.25 2.27 NM
FKKY Frankfort First Bancorp of KY NM 90.63 23.74 90.63 25.00 0.36 4.00 NM
FTNB Fulton Bancorp of MO NM 137.32 34.34 137.32 NM 0.20 1.01 48.78
GFSB GFS Bancorp of Grinnell IA 15.73 129.55 14.99 129.55 12.27 0.26 1.94 30.59
GUPB GFSB Bancorp of Gallup NM 28.62 117.00 19.07 117.00 22.70 0.40 2.03 57.97
GSLA GS Financial Corp. of LA NM 97.91 45.37 97.91 NM 0.28 1.81 NM
GOSB GSB Financial Corp. of NY 28.37 107.04 28.97 107.04 NM 0.00 0.00 0.00
GWBC Gateway Bancorp of KY(8) NM 112.04 29.22 112.04 24.15 0.40 2.24 NM
GBCI Glacier Bancorp of MT 19.00 244.53 23.39 NM 16.81 0.48 2.53 48.00
GLBK Glendale Co-op. Bank of MA(8)* 24.32 110.29 18.06 110.29 25.23 0.00 0.00 0.00
GFCO Glenway Financial Corp. of OH 28.26 110.83 10.59 112.55 15.57 0.68 2.62 73.91
GTPS Great American Bancorp of IL NM 101.75 21.53 101.75 NM 0.40 2.37 NM
GTFN Great Financial Corp. of KY 23.35 171.91 15.98 179.70 24.35 0.60 1.76 41.10
GSBC Great Southern Bancorp of MO 15.48 229.52 20.59 229.52 13.72 0.40 2.37 36.70
GDVS Greater DV SB,MHC of PA (19.9)* NM 191.16 21.93 191.16 NM 0.36 2.25 NM
GSFC Green Street Fin. Corp. of NC NM 122.06 44.05 122.06 25.53 0.44 2.46 NM
GSLC Guaranty Svgs & Loan FA of VA NM NM 15.41 NM NM 0.10 0.84 30.30
GFED Guarnty FS&LA,MHC of MO (31.0)(8) NM 207.37 28.69 207.37 NM 0.40 2.22 NM
HCBB HCB Bancshares of AR NM 101.02 18.43 105.40 NM 0.00 0.00 NM
HEMT HF Bancorp of Hemet CA NM 108.44 10.64 NM NM 0.00 0.00 NM
HFFC HF Financial Corp. of SD 19.55 124.93 11.48 125.22 14.24 0.36 1.67 32.73
HFNC HFNC Financial Corp. of NC NM 176.06 33.14 176.06 24.25 0.28 1.72 54.90
HMNF HMN Financial, Inc. of MN 23.35 123.57 17.60 123.57 19.27 0.00 0.00 0.00
HALL Hallmark Capital Corp. of WI 18.75 113.52 7.93 113.52 14.24 0.00 0.00 0.00
HARB Harbor FSB, MHC of FL (46.0) 22.54 237.70 19.53 247.02 17.13 1.40 3.22 72.54
HRBF Harbor Federal Bancorp of MD NM 118.09 15.19 118.09 23.17 0.40 2.11 NM
HFSA Hardin Bancorp of Hardin MO NM 105.66 13.51 105.66 18.47 0.48 2.95 NM
HARL Harleysville SA of PA 18.85 191.26 12.17 191.26 13.17 0.40 1.63 30.77
HARS Harris SB, MHC of PA (24.2) NM 171.41 13.57 198.65 26.70 0.58 2.47 NM
HFFB Harrodsburg 1st Fin Bcrp of KY 28.18 110.09 29.01 110.09 21.23 0.40 2.58 72.73
HHFC Harvest Home Fin. Corp. of OH NM 105.67 13.13 105.67 26.70 0.40 3.40 NM
HAVN Haven Bancorp of Woodhaven NY 16.34 161.05 9.34 161.68 11.22 0.60 1.61 26.32
HVFD Haverfield Corp. of OH(8) 29.55 172.87 14.50 172.87 13.98 0.56 2.15 63.64
HTHR Hawthorne Fin. Corp. of CA 5.44 105.09 4.08 105.09 7.88 0.00 0.00 0.00
HMLK Hemlock Fed. Fin. Corp. of IL NM 105.24 19.25 105.24 NM 0.00 0.00 NM
</TABLE>
<PAGE> 200
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HBNK Highland Federal Bank of CA 7.46 7.46 0.29 3.91 2.36 0.51 6.75 3.23 57.68 2.28
HIFS Hingham Inst. for Sav. of MA* 9.55 9.55 1.16 12.00 7.44 1.16 12.00 0.55 125.61 0.91
HBEI Home Bancorp of Elgin IL 28.12 28.12 0.31 1.41 0.82 0.81 3.66 0.35 77.63 0.37
HBFW Home Bancorp of Fort Wayne IN 13.95 13.95 0.56 3.74 3.26 0.90 6.05 0.09 468.58 0.53
HBBI Home Building Bancorp of IN 12.07 12.07 0.19 1.47 1.23 0.53 4.02 0.52 32.51 0.28
HCFC Home City Fin. Corp. of OH 20.61 20.61 0.78 5.01 3.46 1.17 7.57 0.62 110.38 0.87
HOMF Home Fed Bancorp of Seymour IN 8.45 8.17 1.03 12.42 6.54 1.22 14.74 0.43 121.80 0.61
HWEN Home Financial Bancorp of IN 18.63 18.63 0.57 3.68 3.00 0.82 5.23 NA NA 0.63
HPBC Home Port Bancorp, Inc. of MA* 10.82 10.82 1.70 15.85 8.35 1.69 15.76 0.25 501.45 1.53
HMCI Homecorp, Inc. of Rockford IL 6.30 6.30 0.11 1.87 1.64 0.38 6.24 3.68 13.13 0.62
HZFS Horizon Fin'l. Services of IA 10.50 10.50 0.43 3.87 3.95 0.60 5.42 1.02 36.63 0.56
HRZB Horizon Financial Corp. of WA* 15.23 15.23 1.55 9.82 6.62 1.52 9.64 0.01 NA 0.85
IBSF IBS Financial Corp. of NJ 17.04 17.04 0.52 2.73 1.92 0.88 4.68 0.15 94.57 0.52
ISBF ISB Financial Corp. of LA 12.27 10.35 0.74 4.49 2.90 1.00 6.05 NA NA 0.79
ITLA Imperial Thrift & Loan of CA* 11.37 11.32 1.46 13.06 7.83 1.46 13.06 1.78 75.09 1.63
IFSB Independence FSB of DC 6.52 5.72 0.14 2.19 2.34 0.33 4.98 NA NA 0.34
INCB Indiana Comm. Bank, SB of IN 12.39 12.39 0.16 1.24 0.98 0.51 3.88 NA NA 0.71
IFSL Indiana Federal Corp. of IN(8) 8.78 8.25 0.67 7.44 3.76 0.95 10.55 0.82 102.87 1.11
INBI Industrial Bancorp of OH 18.49 18.49 0.73 3.87 3.20 1.43 7.56 0.42 115.71 0.55
IWBK Interwest SB of Oak Harbor WA 6.70 6.55 0.84 12.51 4.28 1.18 17.53 0.69 69.69 0.81
IPSW Ipswich SB of Ipswich MA* 6.17 6.17 1.18 19.52 7.85 0.93 15.31 1.94 49.55 1.26
JSBF JSB Financial, Inc. of NY 22.17 22.17 1.78 8.11 6.27 1.69 7.69 1.08 33.09 0.62
JXVL Jacksonville Bancorp of TX 15.63 15.63 0.88 5.43 4.85 1.21 7.48 1.04 48.35 0.67
JXSB Jcksnville SB,MHC of IL (44.6) 10.30 10.30 0.29 2.50 1.97 0.67 5.84 0.39 125.08 0.63
JSBA Jefferson Svgs Bancorp of MO 7.83 6.11 0.25 3.41 1.97 0.63 8.56 0.52 117.45 0.82
JOAC Joachim Bancorp of MO 28.99 28.99 0.51 1.71 1.68 0.78 2.64 0.68 30.45 0.31
KSAV KS Bancorp of Kenly NC 13.83 13.82 0.93 6.48 5.46 1.21 8.47 0.42 70.56 0.35
KSBK KSB Bancorp of Kingfield ME(8)* 6.82 6.32 0.88 13.36 17.74 0.88 13.31 1.66 43.71 1.00
KFBI Klamath First Bancorp of OR 20.44 20.44 0.90 3.79 3.09 1.33 5.59 0.10 176.70 0.24
LSBI LSB Fin. Corp. of Lafayette IN 9.08 9.08 0.50 5.26 4.48 0.42 4.42 1.34 68.99 1.07
LVSB Lakeview SB of Paterson NJ 9.52 7.61 1.37 13.73 8.30 0.95 9.53 NA NA NA
LARK Landmark Bancshares of KS 14.63 14.63 0.84 5.40 4.78 1.05 6.72 0.60 62.24 0.57
LARL Laurel Capital Group of PA 10.42 10.42 1.12 10.59 7.10 1.43 13.55 0.51 181.26 1.31
LSBX Lawrence Savings Bank of MA* 8.78 8.78 1.67 20.44 10.30 1.65 20.28 0.36 290.57 2.27
LFED Leeds FSB, MHC of MD (36.2) 16.18 16.18 0.79 4.89 3.11 1.13 6.98 0.02 977.36 0.30
LXMO Lexington B&L Fin. Corp. of MO 27.62 27.62 0.76 2.77 2.67 1.06 3.82 0.63 58.31 0.49
LIFB Life Bancorp of Norfolk VA 10.79 10.45 0.71 6.30 3.96 0.87 7.74 0.49 144.60 1.54
LFBI Little Falls Bancorp of NJ 12.94 11.91 0.25 1.78 1.64 0.50 3.48 0.90 36.77 0.82
LOGN Logansport Fin. Corp. of IN 19.65 19.65 1.17 5.26 5.36 1.53 6.84 0.45 67.13 0.42
LONF London Financial Corp. of OH 19.86 19.86 0.74 3.55 3.60 1.09 5.19 0.79 62.54 0.64
LISB Long Island Bancorp, Inc of NY 9.01 8.92 0.62 6.41 3.92 0.74 7.62 1.04 56.14 0.95
MAFB MAF Bancorp of IL 7.88 6.84 0.79 10.60 4.71 1.10 14.72 0.49 113.73 0.72
MBLF MBLA Financial Corp. of MO 13.49 13.49 0.66 4.90 4.47 0.86 6.34 0.25 111.87 0.49
MFBC MFB Corp. of Mishawaka IN 14.51 14.51 0.56 3.37 3.62 0.85 5.09 0.03 529.85 0.20
MLBC ML Bancorp of Villanova PA 7.53 7.34 0.72 9.30 6.55 0.65 8.49 NA NA 1.73
MBB MSB Bancorp of Middletown NY* 6.90 2.97 0.15 2.23 1.98 0.17 2.43 0.70 36.62 0.60
MSBF MSB Financial Corp. of MI 16.61 16.61 1.20 6.08 4.14 1.49 7.58 1.02 48.65 0.57
MGNL Magna Bancorp of MS(8) 9.57 9.25 1.38 14.29 5.12 1.63 16.86 3.25 22.63 1.12
MARN Marion Capital Holdings of IN 23.05 23.05 1.32 5.68 5.42 1.59 6.85 0.76 153.22 1.35
MRKF Market Fin. Corp. of OH 33.20 33.20 0.89 2.68 2.67 1.17 3.53 0.89 10.40 0.20
MFCX Marshalltown Fin. Corp. of IA(8) 15.61 15.61 0.34 2.17 1.78 0.71 4.55 NA NA 0.19
MFSL Maryland Fed. Bancorp of MD 8.44 8.33 0.58 6.97 4.56 0.84 10.17 NA NA NA
MASB MassBank Corp. of Reading MA* 9.98 9.98 1.10 10.92 7.01 1.02 10.10 0.19 128.64 0.88
MFLR Mayflower Co-Op. Bank of MA* 9.43 9.26 1.00 10.42 7.00 0.98 10.18 1.03 90.08 1.56
MECH Mechanics SB of Hartford CT* 9.73 9.73 0.25 2.93 1.75 0.27 3.10 1.71 67.13 1.72
MDBK Medford Savings Bank of MA* 8.80 8.15 1.04 11.72 7.58 1.01 11.37 0.45 146.30 1.22
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
HBNK Highland Federal Bank of CA NM 160.46 11.97 160.46 24.51 0.00 0.00 0.00
HIFS Hingham Inst. for Sav. of MA* 13.44 153.97 14.71 153.97 13.44 0.48 2.06 27.75
HBEI Home Bancorp of Elgin IL NM 126.82 35.66 126.82 NM 0.40 2.19 NM
HBFW Home Bancorp of Fort Wayne IN NM 119.74 16.70 119.74 18.97 0.20 0.96 29.41
HBBI Home Building Bancorp of IN NM 121.48 14.67 121.48 29.73 0.30 1.36 NM
HCFC Home City Fin. Corp. of OH 28.92 99.86 20.58 99.86 19.16 0.32 2.17 62.75
HOMF Home Fed Bancorp of Seymour IN 15.28 178.36 15.07 184.38 12.88 0.50 1.69 25.91
HWEN Home Financial Bancorp of IN NM 99.21 18.48 99.21 23.44 0.20 1.33 44.44
HPBC Home Port Bancorp, Inc. of MA* 11.98 182.27 19.71 182.27 12.05 0.80 3.95 47.34
HMCI Homecorp, Inc. of Rockford IL NM 111.82 7.04 111.82 18.18 0.00 0.00 0.00
HZFS Horizon Fin'l. Services of IA 25.33 98.39 10.33 98.39 18.10 0.32 1.68 42.67
HRZB Horizon Financial Corp. of WA* 15.11 149.58 22.79 149.58 15.41 0.40 2.52 38.10
IBSF IBS Financial Corp. of NJ NM 159.39 27.16 159.39 NM 0.32 1.75 NM
ISBF ISB Financial Corp. of LA NM 158.91 19.49 188.28 25.61 0.40 1.55 53.33
ITLA Imperial Thrift & Loan of CA* 12.77 148.68 16.90 149.32 12.77 0.00 0.00 0.00
IFSB Independence FSB of DC NM 92.38 6.03 105.37 18.74 0.22 1.78 NM
INCB Indiana Comm. Bank, SB of IN NM 132.44 16.40 132.44 NM 0.36 2.22 NM
IFSL Indiana Federal Corp. of IN(8) 26.59 194.61 17.09 207.15 18.75 0.72 2.46 65.45
INBI Industrial Bancorp of OH NM 120.51 22.28 120.51 15.99 0.48 3.49 NM
IWBK Interwest SB of Oak Harbor WA 23.35 NM 17.69 NM 16.67 0.60 1.54 35.93
IPSW Ipswich SB of Ipswich MA* 12.75 227.01 14.00 227.01 16.25 0.24 1.23 15.69
JSBF JSB Financial, Inc. of NY 15.94 127.46 28.25 127.46 16.79 1.40 3.18 50.72
JXVL Jacksonville Bancorp of TX 20.61 114.92 17.96 114.92 14.95 0.50 3.28 67.57
JXSB Jcksnville SB,MHC of IL (44.6) NM 126.32 13.00 126.32 21.75 0.40 2.39 NM
JSBA Jefferson Svgs Bancorp of MO NM 160.31 12.56 205.38 20.28 0.40 1.38 70.18
JOAC Joachim Bancorp of MO NM 104.78 30.37 104.78 NM 0.50 3.51 NM
KSAV KS Bancorp of Kenly NC 18.32 117.39 16.23 117.46 14.02 0.60 3.24 59.41
KSBK KSB Bancorp of Kingfield ME(8)* 5.64 70.78 4.83 76.47 5.66 0.08 0.52 2.91
KFBI Klamath First Bancorp of OR NM 136.28 27.86 136.28 21.98 0.30 1.57 50.85
LSBI LSB Fin. Corp. of Lafayette IN 22.34 116.28 10.55 116.28 26.58 0.32 1.52 34.04
LVSB Lakeview SB of Paterson NJ 12.05 168.26 16.01 210.43 17.36 0.25 0.75 8.99
LARK Landmark Bancshares of KS 20.92 113.20 16.56 113.20 16.80 0.40 1.95 40.82
LARL Laurel Capital Group of PA 14.08 145.55 15.17 145.55 11.00 0.44 2.08 29.33
LSBX Lawrence Savings Bank of MA* 9.71 179.52 15.77 179.52 9.78 0.00 0.00 0.00
LFED Leeds FSB, MHC of MD (36.2) NM 153.41 24.82 153.41 22.50 0.76 3.75 NM
LXMO Lexington B&L Fin. Corp. of MO NM 103.82 28.68 103.82 27.16 0.30 1.90 71.43
LIFB Life Bancorp of Norfolk VA 25.26 157.26 16.96 162.32 20.55 0.48 1.98 50.00
LFBI Little Falls Bancorp of NJ NM 115.38 14.93 125.38 NM 0.20 1.21 74.07
LOGN Logansport Fin. Corp. of IN 18.66 109.75 21.57 109.75 14.34 0.40 2.94 54.79
LONF London Financial Corp. of OH 27.78 102.53 20.36 102.53 18.99 0.24 1.60 44.44
LISB Long Island Bancorp, Inc of NY 25.50 162.77 14.66 164.36 21.46 0.60 1.71 43.48
MAFB MAF Bancorp of IL 21.22 193.87 15.28 223.31 15.28 0.28 0.89 18.79
MBLF MBLA Financial Corp. of MO 22.38 109.25 14.74 109.25 17.28 0.40 1.70 38.10
MFBC MFB Corp. of Mishawaka IN 27.63 100.15 14.53 100.15 18.34 0.32 1.63 45.07
MLBC ML Bancorp of Villanova PA 15.28 142.07 10.69 145.61 16.74 0.40 2.08 31.75
MBB MSB Bancorp of Middletown NY* NM 112.83 7.79 NM NM 0.60 2.70 NM
MSBF MSB Financial Corp. of MI 24.18 147.94 24.57 147.94 19.41 0.56 1.90 45.90
MGNL Magna Bancorp of MS(8) 19.55 NM 25.86 NM 16.56 0.60 2.31 45.11
MARN Marion Capital Holdings of IN 18.46 106.59 24.57 106.59 15.32 0.88 3.75 69.29
MRKF Market Fin. Corp. of OH NM 100.56 33.39 100.56 28.50 0.00 0.00 0.00
MFCX Marshalltown Fin. Corp. of IA(8) NM 119.99 18.73 119.99 26.78 0.00 0.00 0.00
MFSL Maryland Fed. Bancorp of MD 21.92 149.93 12.66 151.98 15.03 0.80 1.80 39.41
MASB MassBank Corp. of Reading MA* 14.27 153.50 15.32 153.50 15.42 1.08 2.10 29.92
MFLR Mayflower Co-Op. Bank of MA* 14.29 143.83 13.56 146.38 14.62 0.60 3.16 45.11
MECH Mechanics SB of Hartford CT* NM 137.93 13.42 137.93 NM 0.00 0.00 0.00
MDBK Medford Savings Bank of MA* 13.20 150.59 13.25 162.61 13.61 0.72 2.34 30.90
</TABLE>
<PAGE> 201
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MERI Meritrust FSB of Thibodaux LA 7.90 7.90 0.60 7.91 4.32 0.98 12.87 0.38 80.65 0.58
MWBX Metro West of MA* 7.34 7.34 1.34 17.88 8.61 1.37 18.25 1.19 88.62 1.37
MCBS Mid Continent Bancshares of KS 10.04 10.04 1.02 9.26 5.67 1.17 10.58 0.19 53.92 0.19
MIFC Mid Iowa Financial Corp. of IA 9.10 9.09 0.91 9.88 7.53 1.19 12.96 0.13 186.45 0.44
MCBN Mid-Coast Bancorp of ME 8.60 8.60 0.40 4.50 4.52 0.64 7.22 0.40 128.70 0.61
MWBI Midwest Bancshares, Inc. of IA 6.94 6.94 0.46 6.80 5.33 0.77 11.24 0.82 61.28 0.84
MWFD Midwest Fed. Fin. Corp of WI 8.61 8.28 0.94 10.88 5.87 0.91 10.60 0.14 543.01 1.01
MFFC Milton Fed. Fin. Corp. of OH 14.74 14.74 0.53 3.00 2.91 0.72 4.13 0.32 91.83 0.46
MIVI Miss. View Hold. Co. of MN 18.26 18.26 0.68 3.67 3.80 1.01 5.44 0.25 488.70 1.93
MBSP Mitchell Bancorp of NC* 43.33 43.33 1.34 3.08 2.85 1.68 3.86 2.06 24.32 0.62
MBBC Monterey Bay Bancorp of CA 10.74 9.85 0.28 2.17 1.92 0.51 3.99 0.36 94.16 0.61
MONT Montgomery Financial Corp ofIN 17.91 17.91 0.42 2.32 2.29 0.67 3.74 NA NA NA
MSBK Mutual SB, FSB of Bay City MI 6.01 6.01 0.09 1.62 1.45 0.04 0.65 0.17 168.15 0.71
NHTB NH Thrift Bancshares of NH 7.48 6.34 0.33 4.46 2.67 0.49 6.59 1.03 91.05 1.14
NSLB NS&L Bancorp of Neosho MO 19.93 19.93 0.49 2.30 2.47 0.74 3.47 0.06 127.27 0.13
NMSB Newmil Bancorp. of CT* 9.97 9.97 0.82 7.86 5.53 0.80 7.62 1.30 123.07 3.01
NASB North American SB of MO 7.97 7.71 1.23 16.83 7.26 1.19 16.35 3.34 26.40 1.00
NBSI North Bancshares of Chicago IL 14.61 14.61 0.46 2.95 2.63 0.65 4.20 NA NA 0.28
FFFD North Central Bancshares of IA 24.58 24.58 1.70 6.31 5.96 1.98 7.35 0.22 457.01 1.18
NBN Northeast Bancorp of ME* 6.95 6.01 0.33 4.74 4.34 0.31 4.52 1.37 77.15 1.32
NEIB Northeast Indiana Bncrp of IN 15.16 15.16 1.04 5.98 5.70 1.23 7.07 0.49 126.20 0.71
NWEQ Northwest Equity Corp. of WI 11.42 11.42 0.77 6.16 5.76 0.97 7.83 NA NA 0.59
NWSB Northwest SB, MHC of PA (29.9) 9.71 9.13 0.69 6.88 3.45 1.00 9.95 0.84 80.17 0.89
NSSY Norwalk Savings Society of CT* 8.06 7.77 0.97 12.51 8.07 1.11 14.32 2.09 56.84 1.70
NSSB Norwich Financial Corp. of CT* 10.99 9.86 1.03 9.60 6.09 0.97 9.10 1.00 200.13 2.87
NTMG Nutmeg FS&LA of CT 5.69 5.69 0.27 4.76 3.78 0.35 6.16 NA NA 0.60
OHSL OHSL Financial Corp. of OH 11.04 11.04 0.61 5.15 4.55 0.86 7.34 0.33 68.18 0.31
OCFC Ocean Fin. Corp. of NJ 17.82 17.82 -0.04 -0.29 -0.17 0.95 6.33 0.64 69.12 0.88
OCWN Ocwen Financial Corp. of FL 8.50 8.50 2.70 32.38 7.40 1.96 23.50 4.10 19.90 1.19
OFCP Ottawa Financial Corp. of MI 8.84 7.08 0.43 4.52 2.84 0.74 7.76 0.31 112.26 0.42
PFFB PFF Bancorp of Pomona CA 10.47 10.35 0.11 0.93 0.76 0.45 3.74 1.87 58.44 1.50
PSFI PS Financial of Chicago IL 43.22 43.22 1.92 4.46 4.51 1.98 4.59 0.43 57.23 0.52
PVFC PVF Capital Corp. of OH 7.02 7.02 1.05 15.54 7.80 1.39 20.48 1.20 61.53 0.79
PCCI Pacific Crest Capital of CA* 7.22 7.22 1.05 13.05 7.38 0.89 11.08 1.23 82.93 1.62
PALM Palfed, Inc. of Aiken SC 8.11 8.11 0.06 0.70 0.43 0.57 6.99 2.52 42.12 1.29
PBCI Pamrapo Bancorp, Inc. of NJ 12.80 12.70 0.84 5.70 5.16 1.18 8.04 3.60 20.89 1.33
PFED Park Bancorp of Chicago IL 21.69 21.69 0.77 4.08 3.19 1.07 5.70 0.20 139.28 0.76
PVSA Parkvale Financial Corp of PA 7.48 7.41 0.71 9.51 5.75 1.07 14.27 0.24 604.11 2.08
PBIX Patriot Bank Corp. of PA 8.09 8.09 0.47 4.26 2.93 0.65 5.81 0.13 242.39 0.65
PEEK Peekskill Fin. Corp. of NY 25.57 25.57 1.07 3.74 4.10 1.38 4.81 1.23 26.98 1.36
PFSB PennFed Fin. Services of NJ 7.53 6.21 0.57 7.10 4.95 0.85 10.57 0.69 31.83 0.31
PWBC PennFirst Bancorp of PA 7.07 6.45 0.43 5.89 4.22 0.64 8.84 0.58 86.14 1.57
PWBK Pennwood SB of PA* 19.47 19.47 0.61 3.89 3.12 0.97 6.17 1.13 57.64 1.40
PBKB People's SB of Brockton MA* 5.61 5.37 0.80 14.39 6.72 0.47 8.56 0.88 91.08 1.65
PFDC Peoples Bancorp of Auburn IN 15.18 15.18 1.10 7.20 5.91 1.45 9.47 0.42 73.36 0.39
PBCT Peoples Bank, MHC of CT (37.4)* 8.41 8.40 1.10 13.63 5.02 0.88 10.86 0.91 125.48 1.68
PFFC Peoples Fin. Corp. of OH 26.90 26.90 0.08 0.31 0.31 0.40 1.48 0.01 NA 0.41
PHBK Peoples Heritage Fin Grp of ME* 8.20 6.93 1.24 14.94 5.37 1.32 15.95 0.94 130.42 1.77
PHSB Peoples Home SB of PA 17.31 17.31 0.39 2.23 2.33 0.81 4.67 NA NA NA
PBNB Peoples Sav. Fin. Corp. of CT(8)* 9.60 9.00 0.93 9.31 5.58 0.92 9.26 0.54 70.66 0.69
PSFC Peoples Sidney Fin. Corp of OH 23.26 23.26 0.92 3.97 3.77 1.21 5.18 1.00 42.00 0.45
PERM Permanent Bancorp of IN 9.70 9.60 0.24 2.37 1.86 0.52 5.13 1.08 46.35 0.98
PMFI Perpetual Midwest Fin. of IA 8.50 8.50 0.09 0.99 0.88 0.26 2.87 0.41 172.00 0.94
PERT Perpetual of SC, MHC (46.8) 13.29 13.29 0.75 6.48 2.94 1.06 9.13 NA NA 1.01
PCBC Perry Co. Fin. Corp. of MO 18.85 18.85 0.71 3.66 3.15 0.96 4.97 0.05 64.10 0.20
PHFC Pittsburgh Home Fin. of PA 11.47 11.34 0.57 4.58 3.75 0.81 6.53 1.74 30.40 0.78
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
MERI Meritrust FSB of Thibodaux LA 23.16 175.66 13.88 175.66 14.24 0.70 1.71 39.55
MWBX Metro West of MA* 11.61 194.86 14.31 194.86 11.38 0.12 2.11 24.49
MCBS Mid Continent Bancshares of KS 17.64 162.13 16.28 162.13 15.44 0.40 1.30 22.86
MIFC Mid Iowa Financial Corp. of IA 13.28 126.68 11.53 126.87 10.12 0.08 0.94 12.50
MCBN Mid-Coast Bancorp of ME 22.14 98.65 8.49 98.65 13.80 0.52 2.45 54.17
MWBI Midwest Bancshares, Inc. of IA 18.75 124.50 8.64 124.50 11.35 0.60 1.74 32.61
MWFD Midwest Fed. Fin. Corp of WI 17.03 185.27 15.96 192.87 17.48 0.34 1.72 29.31
MFFC Milton Fed. Fin. Corp. of OH NM 121.47 17.90 121.47 25.00 0.60 4.36 NM
MIVI Miss. View Hold. Co. of MN 26.29 98.07 17.91 98.07 17.73 0.16 1.05 27.59
MBSP Mitchell Bancorp of NC* NM 108.77 47.13 108.77 27.97 0.00 0.00 0.00
MBBC Monterey Bay Bancorp of CA NM 115.31 12.38 125.74 28.28 0.10 0.62 32.26
MONT Montgomery Financial Corp ofIN NM 101.34 18.15 101.34 27.07 0.40 3.52 NM
MSBK Mutual SB, FSB of Bay City MI NM 111.39 6.69 111.39 NM 0.00 0.00 0.00
NHTB NH Thrift Bancshares of NH NM 143.85 10.76 169.75 25.38 0.50 3.03 NM
NSLB NS&L Bancorp of Neosho MO NM 101.65 20.26 101.65 26.81 0.50 3.01 NM
NMSB Newmil Bancorp. of CT* 18.08 144.53 14.41 144.53 18.65 0.24 2.04 36.92
NASB North American SB of MO 13.77 217.66 17.36 224.96 14.17 0.80 1.51 20.78
NBSI North Bancshares of Chicago IL NM 116.54 17.03 116.54 26.62 0.48 2.34 NM
FFFD North Central Bancshares of IA 16.78 112.68 27.70 112.68 14.42 0.25 1.52 25.51
NBN Northeast Bancorp of ME* 23.05 109.34 7.60 126.50 24.18 0.32 2.17 50.00
NEIB Northeast Indiana Bncrp of IN 17.55 110.96 16.83 110.96 14.86 0.32 1.94 34.04
NWEQ Northwest Equity Corp. of WI 17.35 113.99 13.01 113.99 13.66 0.52 3.53 61.18
NWSB Northwest SB, MHC of PA (29.9) 29.02 195.78 19.02 208.33 20.06 0.32 1.97 57.14
NSSY Norwalk Savings Society of CT* 12.40 145.00 11.68 150.38 10.83 0.40 1.33 16.53
NSSB Norwich Financial Corp. of CT* 16.42 154.17 16.94 171.88 17.32 0.56 2.55 41.79
NTMG Nutmeg FS&LA of CT 26.47 122.45 6.97 122.45 20.45 0.00 0.00 0.00
OHSL OHSL Financial Corp. of OH 21.99 113.10 12.48 113.10 15.42 0.88 3.71 NM
OCFC Ocean Fin. Corp. of NJ NM 127.29 22.68 127.29 26.73 0.80 2.30 NM
OCWN Ocwen Financial Corp. of FL 13.51 NM 35.40 NM 18.62 0.00 0.00 0.00
OFCP Ottawa Financial Corp. of MI NM 163.37 14.45 204.15 20.52 0.40 1.62 57.14
PFFB PFF Bancorp of Pomona CA NM 131.30 13.75 132.81 NM 0.00 0.00 0.00
PSFI PS Financial of Chicago IL 22.15 98.25 42.46 98.25 21.50 0.32 2.19 48.48
PVFC PVF Capital Corp. of OH 12.82 183.38 12.88 183.38 9.73 0.00 0.00 0.00
PCCI Pacific Crest Capital of CA* 13.56 170.67 12.32 170.67 15.97 0.00 0.00 0.00
PALM Palfed, Inc. of Aiken SC NM 161.37 13.08 161.37 23.21 0.12 0.74 NM
PBCI Pamrapo Bancorp, Inc. of NJ 19.39 126.29 16.17 127.38 13.74 1.00 4.82 NM
PFED Park Bancorp of Chicago IL NM 104.66 22.70 104.66 22.46 0.00 0.00 0.00
PVSA Parkvale Financial Corp of PA 17.38 159.13 11.90 160.47 11.59 0.52 1.82 31.71
PBIX Patriot Bank Corp. of PA NM 157.64 12.75 157.64 25.00 0.35 1.97 67.31
PEEK Peekskill Fin. Corp. of NY 24.40 105.42 26.96 105.42 18.98 0.36 2.34 57.14
PFSB PennFed Fin. Services of NJ 20.19 139.39 10.49 169.04 13.56 0.28 1.03 20.74
PWBC PennFirst Bancorp of PA 23.68 140.96 9.97 154.51 15.79 0.36 2.00 47.37
PWBK Pennwood SB of PA* NM 96.41 18.77 96.41 20.21 0.32 2.17 69.57
PBKB People's SB of Brockton MA* 14.87 201.28 11.29 210.11 25.00 0.44 2.55 37.93
PFDC Peoples Bancorp of Auburn IN 16.91 121.63 18.46 121.63 12.85 0.60 2.61 44.12
PBCT Peoples Bank, MHC of CT (37.4)* 19.92 NM 21.45 NM 25.00 0.67 2.53 50.38
PFFC Peoples Fin. Corp. of OH NM 100.43 27.02 100.43 NM 0.50 3.08 NM
PHBK Peoples Heritage Fin Grp of ME* 18.63 236.86 19.43 NM 17.45 0.72 1.86 34.62
PHSB Peoples Home SB of PA NM 95.75 16.57 95.75 20.52 0.00 0.00 0.00
PBNB Peoples Sav. Fin. Corp. of CT(8)* 17.93 163.45 15.70 174.44 18.01 0.92 2.33 41.82
PSFC Peoples Sidney Fin. Corp of OH 26.55 105.54 24.55 105.54 20.37 0.00 0.00 0.00
PERM Permanent Bancorp of IN NM 129.35 12.55 130.63 24.75 0.40 1.58 NM
PMFI Perpetual Midwest Fin. of IA NM 115.69 9.83 115.69 NM 0.30 1.46 NM
PERT Perpetual of SC, MHC (46.8) NM 172.68 22.95 172.68 24.11 1.40 4.12 NM
PCBC Perry Co. Fin. Corp. of MO NM 118.60 22.36 118.60 23.42 0.40 1.80 57.14
PHFC Pittsburgh Home Fin. of PA 26.69 114.88 13.18 116.24 18.75 0.24 1.52 40.68
</TABLE>
<PAGE> 202
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PFSL Pocahnts Fed, MHC of AR (46.4) 6.38 6.38 0.58 9.56 5.96 0.81 13.35 0.28 170.57 1.20
POBS Portsmouth Bank Shrs Inc of NH(8)* 25.12 25.12 2.24 8.99 5.96 1.95 7.85 0.38 69.08 0.70
PTRS Potters Financial Corp of OH 8.91 8.91 0.31 3.45 3.41 0.67 7.45 0.83 231.18 3.23
PKPS Poughkeepsie Fin. Corp. of NY 8.41 8.41 0.21 2.47 1.72 0.47 5.65 4.21 26.20 1.45
PRBC Prestige Bancorp of PA 11.69 11.69 0.27 2.17 2.05 0.58 4.61 0.32 78.54 0.39
PETE Primary Bank of NH(8)* 6.62 6.61 0.84 13.14 6.28 0.83 12.98 1.05 54.10 1.02
PFNC Progress Financial Corp. of PA 5.21 4.56 0.45 8.54 4.09 0.56 10.49 1.36 61.30 1.22
PSBK Progressive Bank, Inc. of NY* 8.35 7.40 1.10 13.18 8.34 1.11 13.28 0.84 127.85 1.58
PROV Provident Fin. Holdings of CA 14.22 14.22 0.23 1.72 1.40 0.11 0.86 1.97 44.11 1.03
PULB Pulaski SB, MHC of MO (29.0) 12.59 12.59 0.49 3.91 2.11 0.78 6.24 NA NA 0.33
PLSK Pulaski SB, MHC of NJ (46.0) 12.01 12.01 0.28 2.34 1.72 0.64 5.29 0.68 NA NA
PULS Pulse Bancorp of S. River NJ 7.80 7.80 0.72 8.47 5.74 1.08 12.67 0.75 60.59 1.83
QCFB QCF Bancorp of Virginia MN 17.64 17.64 1.24 6.25 5.39 1.24 6.25 NA NA NA
QCBC Quaker City Bancorp of CA 8.91 8.90 0.32 3.44 2.58 0.57 6.25 1.49 69.17 1.25
QCSB Queens County Bancorp of NY* 14.98 14.98 1.72 10.84 4.21 1.74 10.94 0.75 91.25 0.80
RCSB RCSB Financial, Inc. of NY(8)* 7.85 7.65 0.96 12.26 5.48 0.96 12.17 0.76 83.90 1.18
RARB Raritan Bancorp. of Raritan NJ* 7.68 7.54 0.93 12.31 6.30 1.01 13.41 0.46 179.82 1.27
REDF RedFed Bancorp of Redlands CA 8.18 8.17 0.12 1.71 0.90 0.47 6.50 3.26 34.86 1.33
RELY Reliance Bancorp, Inc. of NY 8.04 5.64 0.56 6.66 4.03 0.85 10.11 0.75 33.69 0.56
RELI Reliance Bancshares Inc of WI(8)* 61.06 61.06 1.32 2.16 3.08 1.32 2.16 NA NA 0.52
RIVR River Valley Bancorp of IN 12.36 12.17 -0.18 -1.46 -1.35 -0.18 -1.46 0.12 700.00 1.06
RSLN Roslyn Bancorp, Inc. of NY* 21.57 21.46 0.35 1.63 1.04 1.42 6.61 0.31 264.38 3.59
RVSB Rvrview SB,FSB MHC of WA(41.7)(8) 11.16 10.11 0.92 8.38 3.49 1.17 10.71 0.10 372.65 0.54
SCCB S. Carolina Comm. Bnshrs of SC 25.95 25.95 0.82 2.99 2.74 1.10 4.03 1.78 35.52 0.81
SBFL SB Fngr Lakes MHC of NY (33.1) 9.45 9.45 0.07 0.71 0.45 0.49 4.77 0.78 68.91 1.22
SFED SFS Bancorp of Schenectady NY 12.99 12.99 0.46 3.46 3.29 0.83 6.22 0.69 58.23 0.57
SGVB SGV Bancorp of W. Covina CA 7.27 7.14 0.14 1.66 1.47 0.37 4.29 0.61 49.82 0.42
SISB SIS Bank of Springfield MA* 7.22 7.22 1.45 19.63 11.58 1.44 19.45 0.46 254.44 2.57
SWCB Sandwich Co-Op. Bank of MA* 8.24 7.86 0.94 11.30 6.84 0.95 11.45 1.28 62.63 1.13
SECP Security Capital Corp. of WI(8) 15.85 15.85 1.15 7.17 4.60 1.38 8.58 0.11 989.84 1.46
SFSL Security First Corp. of OH 9.36 9.20 1.10 11.88 5.39 1.39 15.04 0.26 301.46 0.87
SMFC Sho-Me Fin. Corp. of MO(8) 9.54 9.54 0.91 8.68 4.60 1.09 10.34 0.09 664.29 0.70
SOBI Sobieski Bancorp of S. Bend IN 15.41 15.41 0.29 1.67 1.85 0.58 3.35 0.25 102.04 0.35
SOSA Somerset Savings Bank of MA(8)* 5.90 5.90 0.58 10.29 5.75 0.58 10.29 6.50 19.62 1.69
SSFC South Street Fin. Corp. of NC* 25.44 25.44 0.77 4.27 2.06 1.03 5.74 0.28 63.69 0.39
SCBS Southern Commun. Bncshrs of AL 20.77 20.77 0.62 3.01 2.62 1.11 5.34 2.28 50.34 2.02
SMBC Southern Missouri Bncrp of MO 15.67 15.67 1.03 6.46 5.83 1.01 6.33 1.10 37.60 0.64
SWBI Southwest Bancshares of IL 10.78 10.78 0.75 6.86 4.92 1.05 9.56 0.18 112.82 0.28
SVRN Sovereign Bancorp of PA 4.04 2.97 0.41 10.32 3.45 0.68 17.07 0.60 81.74 0.77
STFR St. Francis Cap. Corp. of WI 8.10 7.13 0.59 6.39 4.25 0.69 7.56 0.27 143.07 0.88
SPBC St. Paul Bancorp, Inc. of IL 8.74 8.71 0.68 7.65 3.72 1.00 11.30 0.48 163.91 1.18
STND Standard Fin. of Chicago IL(8) 10.90 10.89 0.47 4.12 2.73 0.71 6.18 0.22 137.54 0.49
SFFC StateFed Financial Corp. of IA 17.60 17.60 1.04 5.59 5.45 1.27 6.87 1.89 15.67 0.37
SFIN Statewide Fin. Corp. of NJ 9.30 9.28 0.51 5.01 3.81 0.89 8.74 0.49 80.61 0.81
STSA Sterling Financial Corp. of WA 3.99 3.39 0.07 1.61 0.95 0.31 7.68 0.43 119.58 0.81
SFSB SuburbFed Fin. Corp. of IL 6.56 6.54 0.33 4.93 3.81 0.54 8.08 0.27 75.49 0.33
SBCN Suburban Bancorp. of OH(8) 11.67 11.67 0.51 4.13 3.27 0.75 6.14 0.19 725.46 1.73
ROSE T R Financial Corp. of NY* 6.16 6.16 0.98 15.66 7.37 0.85 13.70 0.40 108.61 0.83
THRD TF Financial Corp. of PA 10.84 9.45 0.54 4.44 3.95 0.76 6.24 0.33 88.83 0.60
TPNZ Tappan Zee Fin., Inc. of NY 17.92 17.92 0.69 4.14 3.13 0.64 3.82 NA NA 1.18
ESBK The Elmira SB FSB of Elmira NY* 6.30 6.03 0.28 4.48 3.96 0.27 4.28 0.83 76.33 0.80
GRTR The Greater New York SB of NY(8)* 6.27 6.27 0.46 7.67 3.95 0.40 6.60 7.49 8.61 1.72
TSBS Trenton SB, FSB MHC of NJ(35.0 16.65 15.22 1.36 7.47 4.15 1.20 6.58 0.77 59.50 0.75
TRIC Tri-County Bancorp of WY 15.31 15.31 0.76 4.72 4.12 0.99 6.14 0.05 965.12 1.16
TWIN Twin City Bancorp of TN 12.92 12.92 0.57 4.36 3.46 0.79 6.04 0.19 127.41 0.33
UFRM United FS&LA of Rocky Mount NC 7.60 7.60 0.22 2.86 1.55 0.47 6.02 0.85 124.07 1.42
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
PFSL Pocahnts Fed, MHC of AR (46.4) 16.79 154.00 9.82 154.00 12.03 0.90 4.00 67.16
POBS Portsmouth Bank Shrs Inc of NH(8)* 16.78 152.18 38.23 152.18 19.24 0.60 3.50 58.82
PTRS Potters Financial Corp of OH 29.33 102.90 9.16 102.90 13.58 0.36 1.64 48.00
PKPS Poughkeepsie Fin. Corp. of NY NM 141.39 11.89 141.39 25.41 0.10 1.23 71.43
PRBC Prestige Bancorp of PA NM 97.02 11.34 97.02 22.99 0.12 0.77 37.50
PETE Primary Bank of NH(8)* 15.92 193.56 12.81 193.98 16.11 0.00 0.00 0.00
PFNC Progress Financial Corp. of PA 24.43 196.53 10.24 224.43 19.91 0.08 0.74 18.18
PSBK Progressive Bank, Inc. of NY* 12.00 155.19 12.97 175.21 11.90 0.68 2.29 27.42
PROV Provident Fin. Holdings of CA NM 109.14 15.52 109.14 NM 0.00 0.00 0.00
PULB Pulaski SB, MHC of MO (29.0) NM 184.84 23.27 184.84 29.66 1.00 5.03 NM
PLSK Pulaski SB, MHC of NJ (46.0) NM 136.01 16.34 136.01 25.71 0.30 2.24 NM
PULS Pulse Bancorp of S. River NJ 17.41 155.02 12.09 155.02 11.64 0.70 3.44 59.83
QCFB QCF Bancorp of Virginia MN 18.56 133.51 23.56 133.51 18.56 0.00 0.00 0.00
QCBC Quaker City Bancorp of CA NM 130.49 11.63 130.67 21.35 0.00 0.00 0.00
QCSB Queens County Bancorp of NY* 23.78 NM 39.53 NM 23.55 1.00 2.05 48.78
RCSB RCSB Financial, Inc. of NY(8)* 18.23 223.61 17.55 229.42 18.37 0.60 1.24 22.56
RARB Raritan Bancorp. of Raritan NJ* 15.86 183.41 14.08 186.84 14.56 0.48 2.09 33.10
REDF RedFed Bancorp of Redlands CA NM 161.52 13.21 161.68 29.39 0.00 0.00 0.00
RELY Reliance Bancorp, Inc. of NY 24.78 163.72 13.17 233.55 16.34 0.64 2.23 55.17
RELI Reliance Bancshares Inc of WI(8)* NM 70.15 42.83 70.15 NM 0.00 0.00 0.00
RIVR River Valley Bancorp of IN NM 107.86 13.33 109.54 NM 0.00 0.00 NM
RSLN Roslyn Bancorp, Inc. of NY* NM 157.60 33.99 158.39 23.86 0.20 0.90 NM
RVSB Rvrview SB,FSB MHC of WA(41.7)(8) 28.61 229.25 25.57 NM 22.41 0.24 1.01 28.92
SCCB S. Carolina Comm. Bnshrs of SC NM 111.05 28.82 111.05 27.14 0.60 3.16 NM
SBFL SB Fngr Lakes MHC of NY (33.1) NM 157.50 14.89 157.50 NM 0.40 2.25 NM
SFED SFS Bancorp of Schenectady NY NM 105.74 13.74 105.74 16.90 0.28 1.53 46.67
SGVB SGV Bancorp of W. Covina CA NM 120.87 8.79 123.15 26.32 0.00 0.00 0.00
SISB SIS Bank of Springfield MA* 8.64 157.91 11.39 157.91 8.72 0.48 1.70 14.68
SWCB Sandwich Co-Op. Bank of MA* 14.62 159.37 13.13 167.18 14.43 1.20 3.66 53.57
SECP Security Capital Corp. of WI(8) 21.75 152.32 24.15 152.32 18.16 1.20 1.25 27.27
SFSL Security First Corp. of OH 18.55 199.92 18.72 203.51 14.66 0.48 2.02 37.50
SMFC Sho-Me Fin. Corp. of MO(8) 21.75 196.65 18.77 196.65 18.26 0.00 0.00 0.00
SOBI Sobieski Bancorp of S. Bend IN NM 101.37 15.62 101.37 27.08 0.28 1.72 NM
SOSA Somerset Savings Bank of MA(8)* 17.39 169.19 9.98 169.19 17.39 0.00 0.00 0.00
SSFC South Street Fin. Corp. of NC* NM 125.83 32.01 125.83 NM 0.40 2.35 NM
SCBS Southern Commun. Bncshrs of AL NM 114.66 23.81 114.66 21.48 0.30 1.97 75.00
SMBC Southern Missouri Bncrp of MO 17.16 110.41 17.30 110.41 17.50 0.50 2.86 49.02
SWBI Southwest Bancshares of IL 20.31 139.77 15.07 139.77 14.57 0.76 3.60 73.08
SVRN Sovereign Bancorp of PA 28.98 NM 10.85 NM 17.52 0.08 0.50 14.55
STFR St. Francis Cap. Corp. of WI 23.53 151.64 12.28 172.33 19.89 0.48 1.33 31.37
SPBC St. Paul Bancorp, Inc. of IL 26.88 200.52 17.52 201.22 18.20 0.32 1.38 37.21
STND Standard Fin. of Chicago IL(8) NM 148.98 16.24 149.16 24.45 0.40 1.60 58.82
SFFC StateFed Financial Corp. of IA 18.33 101.32 17.83 101.32 14.92 0.40 2.08 38.10
SFIN Statewide Fin. Corp. of NJ 26.24 139.06 12.94 139.38 15.06 0.40 2.18 57.14
STSA Sterling Financial Corp. of WA NM 169.34 6.76 199.58 22.09 0.00 0.00 0.00
SFSB SuburbFed Fin. Corp. of IL 26.23 126.00 8.27 126.54 16.02 0.32 1.20 31.37
SBCN Suburban Bancorp. of OH(8) NM 125.28 14.62 125.28 20.56 0.60 2.73 NM
ROSE T R Financial Corp. of NY* 13.56 200.59 12.36 200.59 15.50 0.52 2.18 29.55
THRD TF Financial Corp. of PA 25.32 117.03 12.69 134.23 18.02 0.40 2.00 50.63
TPNZ Tappan Zee Fin., Inc. of NY NM 118.71 21.27 118.71 NM 0.20 1.20 38.46
ESBK The Elmira SB FSB of Elmira NY* 25.28 113.24 7.14 118.30 26.47 0.64 2.84 71.91
GRTR The Greater New York SB of NY(8)* 25.29 184.63 11.57 184.63 29.39 0.20 0.92 23.26
TSBS Trenton SB, FSB MHC of NJ(35.0 24.11 175.48 29.22 191.94 27.36 0.35 1.73 41.67
TRIC Tri-County Bancorp of WY 24.25 112.16 17.18 112.16 18.65 0.60 2.47 60.00
TWIN Twin City Bancorp of TN 28.93 127.92 16.53 127.92 20.88 0.64 3.16 NM
UFRM United FS&LA of Rocky Mount NC NM 182.84 13.90 182.84 NM 0.24 1.96 NM
</TABLE>
<PAGE> 203
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Exhibit IV-1 (continued)
Weekly Thrift Market Line - Part Two
Prices As Of July 17, 1997
<TABLE>
<CAPTION>
Key Financial Ratios
---------------------------------------------------------- Asset Quality Ratios
Tang. Reported Earnings Core Earnings -----------------------
Equity/ Equity/ ---------------------- --------------- NPAs Resvs/ Resvs/
Financial Institution Assets Assets ROA(5) ROE(5) ROI(5) ROA(5) ROE(5) Assets NPAs Loans
- --------------------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
(%) (%) (%) (%) (%) (%) (%) (%) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
UBMT United Fin. Corp. of MT 22.65 22.65 1.09 4.70 3.92 1.34 5.80 0.42 16.41 0.21
VABF Va. Beach Fed. Fin. Corp of VA 6.79 6.79 0.15 2.19 1.30 0.41 6.09 1.15 63.74 0.96
VFFC Virginia First Savings of VA(8) 8.06 7.78 1.36 17.14 7.87 1.25 15.72 2.29 47.29 1.19
WHGB WHG Bancshares of MD 21.88 21.88 0.74 3.28 3.13 0.74 3.28 0.39 57.59 0.28
WSFS WSFS Financial Corp. of DE* 5.13 5.08 1.30 22.90 9.59 1.31 23.06 2.19 76.62 2.83
WVFC WVS Financial Corp. of PA* 12.72 12.72 1.08 8.12 6.13 1.34 10.10 0.31 229.86 1.31
WRNB Warren Bancorp of Peabody MA* 10.10 10.10 2.09 22.34 11.10 1.73 18.48 1.39 81.06 1.81
WFSL Washington FS&LA of Seattle WA 11.55 10.40 1.65 14.21 7.03 1.83 15.74 0.90 52.91 0.66
WAMU Washington Mutual Inc. of WA* 5.02 4.73 0.24 4.44 1.03 0.70 13.19 0.93 85.52 1.13
WYNE Wayne Bancorp of NJ 14.56 14.56 0.37 2.58 1.97 0.37 2.58 0.85 91.84 1.24
WAYN Wayne S&L Co. MHC of OH (47.8) 9.12 9.12 0.27 2.96 1.67 0.64 7.01 0.71 50.17 0.42
WCFB Wbstr Cty FSB MHC of IA (45.2) 23.56 23.56 1.01 4.44 2.83 1.35 5.89 0.27 141.96 0.67
WBST Webster Financial Corp. of CT 5.08 4.27 0.34 6.67 2.55 0.69 13.50 0.94 97.81 1.44
WEFC Wells Fin. Corp. of Wells MN 14.24 14.24 0.63 4.43 3.94 1.02 7.14 0.30 106.53 0.36
WCBI WestCo Bancorp of IL 15.57 15.57 1.09 7.05 5.27 1.41 9.06 0.84 33.74 0.39
WSTR WesterFed Fin. Corp. of MT 10.98 8.67 0.56 4.33 2.85 0.78 5.99 0.22 226.57 0.76
WOFC Western Ohio Fin. Corp. of OH 13.41 12.64 0.31 2.02 2.18 0.44 2.90 0.96 45.88 0.59
WWFC Westwood Fin. Corp. of NJ 9.22 8.17 0.43 4.44 3.15 0.80 8.22 0.14 146.31 0.54
WEHO Westwood Hmstd Fin Corp of OH 30.96 30.96 0.55 2.11 1.49 0.93 3.54 NA NA 0.19
WFCO Winton Financial Corp. of OH 7.13 6.95 0.66 8.78 5.60 0.84 11.18 NA NA 0.33
FFWD Wood Bancorp of OH 12.70 12.70 1.00 7.48 4.64 1.24 9.24 0.10 346.50 0.41
YFCB Yonkers Fin. Corp. of NY 15.30 15.30 0.84 5.28 4.03 1.16 7.25 0.73 51.78 1.17
YFED York Financial Corp. of PA 8.43 8.43 0.60 7.20 4.51 0.77 9.28 2.49 22.69 0.65
</TABLE>
<TABLE>
<CAPTION>
Pricing Ratios Dividend Data(6)
---------------------------------------- -----------------------
Price/ Price/ Ind. Divi-
Price/ Price/ Price/ Tang. Core Div./ dend Payout
Financial Institution Earning Book Assets Book Earnings Share Yield Ratio(7)
- --------------------- ------- ------- ------- ------- -------- ------- ------- -------
(X) (%) (%) (%) (x) ($) (%) (%)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NASDAQ Listed OTC Companies (continued)
- ---------------------------------------
UBMT United Fin. Corp. of MT 25.53 120.30 27.25 120.30 20.69 0.96 4.00 NM
VABF Va. Beach Fed. Fin. Corp of VA NM 167.31 11.35 167.31 27.74 0.20 1.44 NM
VFFC Virginia First Savings of VA(8) 12.71 202.64 16.34 209.85 13.86 0.10 0.43 5.52
WHGB WHG Bancshares of MD NM 107.14 23.44 107.14 NM 0.20 1.33 42.55
WSFS WSFS Financial Corp. of DE* 10.43 239.67 12.29 242.07 10.36 0.00 0.00 0.00
WVFC WVS Financial Corp. of PA* 16.31 130.49 16.60 130.49 13.11 0.80 2.99 48.78
WRNB Warren Bancorp of Peabody MA* 9.01 183.94 18.58 183.94 10.89 0.52 2.93 26.40
WFSL Washington FS&LA of Seattle WA 14.23 187.86 21.70 208.59 12.85 0.92 3.48 49.46
WAMU Washington Mutual Inc. of WA* NM NM 17.88 NM NM 1.04 1.60 NM
WYNE Wayne Bancorp of NJ NM 119.19 17.35 119.19 NM 0.20 1.01 51.28
WAYN Wayne S&L Co. MHC of OH (47.8) NM 177.34 16.18 177.34 25.35 0.62 3.44 NM
WCFB Wbstr Cty FSB MHC of IA (45.2) NM 155.50 36.63 155.50 26.64 0.80 4.92 NM
WBST Webster Financial Corp. of CT NM 198.65 10.09 236.07 19.39 0.80 1.70 66.67
WEFC Wells Fin. Corp. of Wells MN 25.40 110.92 15.79 110.92 15.75 0.00 0.00 0.00
WCBI WestCo Bancorp of IL 18.98 133.40 20.77 133.40 14.77 0.60 2.31 43.80
WSTR WesterFed Fin. Corp. of MT NM 123.70 13.58 156.55 25.34 0.42 1.84 64.62
WOFC Western Ohio Fin. Corp. of OH NM 94.79 12.71 100.59 NM 1.00 4.55 NM
WWFC Westwood Fin. Corp. of NJ NM 137.72 12.69 155.45 17.14 0.20 0.94 29.85
WEHO Westwood Hmstd Fin Corp of OH NM 104.24 32.27 104.24 NM 0.28 1.90 NM
WFCO Winton Financial Corp. of OH 17.86 142.99 10.19 146.63 14.02 0.46 3.07 54.76
FFWD Wood Bancorp of OH 21.57 158.16 20.09 158.16 17.46 0.60 2.73 58.82
YFCB Yonkers Fin. Corp. of NY 24.81 121.49 18.58 121.49 18.07 0.20 1.20 29.85
YFED York Financial Corp. of PA 22.16 153.68 12.95 153.68 17.20 0.60 2.79 61.86
</TABLE>
<PAGE> 204
EXHIBIT IV-2
Historical Stock Price Indices
<PAGE> 205
Historical Stock Price Indices(1)
<TABLE>
<CAPTION>
SNL SNL
NASDAQ Thrift Bank
Year/Qtr. Ended DJIA S&P 500 Composite Index Index
--------------- ---- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
1991: Quarter 1 2881.1 375.2 482.3 125.5 66.0
Quarter 2 2957.7 371.2 475.9 130.5 82.0
Quarter 3 3018.2 387.9 526.9 141.8 90.7
Quarter 4 3168.0 417.1 586.3 144.7 103.1
1992: Quarter 1 3235.5 403.7 603.8 157.0 113.3
Quarter 2 3318.5 408.1 563.6 173.3 119.7
Quarter 3 3271.7 417.8 583.3 167.0 117.1
Quarter 4 3301.1 435.7 677.0 201.1 136.7
1993: Quarter 1 3435.1 451.7 690.1 228.2 151.4
Quarter 2 3516.1 450.5 704.0 219.8 147.0
Quarter 3 3555.1 458.9 762.8 258.4 154.3
Quarter 4 3754.1 466.5 776.8 252.5 146.2
1994: Quarter 1 3625.1 445.8 743.5 241.6 143.1
Quarter 2 3625.0 444.3 706.0 269.6 152.6
Quarter 3 3843.2 462.6 764.3 279.7 149.2
Quarter 4 3834.4 459.3 752.0 244.7 137.6
1995: Quarter 1 4157.7 500.7 817.2 278.4 152.1
Quarter 2 4556.1 544.8 933.5 313.5 171.7
Quarter 3 4789.1 584.4 1,043.5 362.3 195.3
Quarter 4 5117.1 615.9 1,052.1 376.5 207.6
1996: Quarter 1 5587.1 645.5 1,101.4 382.1 225.1
Quarter 2 5654.6 670.6 1,185.0 387.2 224.7
Quarter 3 5882.2 687.3 1,226.9 429.3 249.2
Quarter 4 6442.5 737.0 1,280.7 483.6 280.1
1997: Quarter 1 6583.5 757.1 1,221.7 527.7 292.5
July 17, 1997 8020.8 931.6 1,568.9 652.5 349.8
</TABLE>
(1) End of period data.
Sources: SNL Securities; Wall Street Journal.
<PAGE> 206
EXHIBIT IV-3
Historical Thrift Stock Indices
<PAGE> 207
INDEX VALUES
<TABLE>
<CAPTION>
INDEX VALUES PERCENT CHANGE SINCE
------------------------------------------------------ ---------------------------------
06/30/97 1 MONTH YTD 52 WEEK 1 MONTH YTD 52 WEEK
<S> <C> <C> <C> <C> <C> <C> <C>
All Pub. Traded Thrifts 624.5 577.9 483.6 385.5 8.06 29.14 62.02
MHC Index 683.8 628.7 538.0 431.1 8.77 27.09 58.59
INSURANCE INDICES
- ------------------------------------------------------------------------------------------------------------------------------
SAIF Thrifts 555.0 516.8 439.2 358.2 7.38 26.36 54.93
BIF Thrifts 832.1 757.3 616.8 467.3 9.87 34.89 78.07
STOCK EXCHANGE INDICES
- ------------------------------------------------------------------------------------------------------------------------------
AMEX Thrifts 192.7 172.6 156.2 133.0 11.67 23.39 44.90
NYSE Thrifts 368.3 342.3 277.3 218.3 7.59 32.82 68.70
OTC Thrifts 721.8 667.0 569.7 461.3 8.21 26.68 56.46
GEOGRAPHICAL INDICES
- ------------------------------------------------------------------------------------------------------------------------------
Mid-Atlantic Thrifts 1,267.3 1,148.2 970.7 739.0 10.37 30.56 71.49
Midwestern Thrifts 1,369.4 1,293.8 1,159.3 961.8 5.84 18.12 42.38
New England Thrifts 553.2 498.8 428.9 338.3 10.90 28.99 63.53
Southeastern Thrifts 561.4 521.3 447.2 384.7 7.69 25.55 45.94
Southwestern Thrifts 419.8 383.5 315.9 257.5 9.48 32.92 63.06
Western Thrifts 635.1 592.5 474.7 380.3 7.21 33.80 67.02
ASSET SIZE INDICES
- ------------------------------------------------------------------------------------------------------------------------------
Less than $250M 676.0 648.7 586.6 544.5 4.20 15.24 24.15
$250M to $500M 947.0 898.1 789.8 685.7 5.44 19.91 38.11
$500M to $1B 639.2 590.0 521.8 442.2 8.34 22.50 44.53
$1B to $5B 704.8 639.9 546.0 430.8 10.14 29.07 63.60
Over $5B 403.6 374.7 305.8 238.1 7.72 31.97 69.54
COMPARATIVE INDICES
- ------------------------------------------------------------------------------------------------------------------------------
Dow Jones Industrials 7,672.8 7,331.0 6,448.3 5,654.6 4.66 18.99 35.59
S&P 500 885.2 848.3 740.7 670.6 4.35 19.50 31.99
All SNL indices are market-value weighted: i.e., an institution's effect on an index is proportionate to that
institution's market capitalization. All SNL thrift indices, except for the SNL MHC index, began at 100 on March
30, 1984. The SNL MHC index began at 201.082 on Dec. 31, 1992, the level of the SNL Thrift index on that date. On
March 30, 1984, the S&P 500 closed at 159.2 and the Dow Jones Industrials stood at 1164.9.
Mid-Atlantic: DE, DC, PA, MD, NJ, NY, PR; Midwest: IA, IL, IN, KS, KY, MI,
MN, MO, ND, NE, OH, SD, WI; New England: CT, ME, MA,
NH, RI, VT; Southeast: AL, AR, FL, GA, MS, NC, SC, TN, VA, WV; Southwest: CO, LA, NM, OK, TX, UT; West: AZ, AK, CA, HI, ID, MT,
NV, OR, WA, WY
</TABLE>
<PAGE> 208
EXHIBIT IV-4
MARKET AREA ACQUISITION ACTIVITY
<PAGE> 209
STATEN ISLAND SAVINGS BANK
THRIFT ACQUISITIONS IN NEW JERSEY AND NEW YORK
JANUARY 1, 1995 - JULY 18, 1997
<TABLE>
<CAPTION>
Seller Financials at Announcement
-----------------------------------------------------
Total TgEq/ TTM TTM NPAs/ Rsvrs/
Announce Assets Assets ROAA ROAL Assets NPLs
Date Buyer ST Seller ST ($000) (%) (%) (%) (%) (%)
- -------- ----- -- ------ -- --------- ------ ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
05/21/97 Charter One Fin'l OH RCSB Financial NY Pooling 4,032,365 7.66 0.98% 12.55% 0.66 132.02
04/25/97 Flushing Financial NY New York FSB NY Purch. 12,249 9.28 1.20% 12.88% 1.14 117.28
03/31/97 Astoria Financial Cp. NY Charter New York SB NY Purch. 2,541,888 8.25 0.73% 8.82% 7.84 9.20
02/28/97 Summit Bancorp. NJ Collective Bancorp NJ Pooling 5,543,924 6.14 0.86% 12.67% NA NA
02/06/97 Sovereign Bancorp PA Bankers Corp NJ Not Disc. 2,330,150 7.92 0.93% 11.51% 1.11 35.75
12/03/96 Dinso Bancorp NY BFS Bankorp, Inc. NY Purch. 643,180 7.81 1.44% 18.39% 1.04 94.15
08/22/96 USBC Holdings Plc FO First FSLA-Rochester NY Purch. 7,348,042 5.35 0.69% 12.79% 0.72 105.64
07/15/96 North Fork Bancorp NY North Side SB NY Pooling 1,580,435 7.67 1.14% 14.68% 0.51 121.82
06/25/96 Sovereign Bancorp PA First State Fin Ser NJ Pooling 665,937 5.69 0.01% 0.24% 4.24 39.46
05/22/96 Summit Bancorp. NJ Central Jersey Fin'l NJ Purch. 466,208 11.04 1.08% 9.20% 1.91 36.29
02/15/96 Center Bancorp NJ Lehigh Savings Bank NJ Purch. 73,821 5.35 0.29% 5.47% 1.17 49.39
11/03/95 Dinso SB Williamsbrgh NY Conestoga Bancorp NY Purch. 485,132 15.93 0.75% 4.71% 0.19 19.25
02/24/95 Republic New York NY Brooklyn Bancorp NY Purch. 4,139,215 8.79 0.87% 9.88% 13.63 18.75
07/31/95 Reliance Bancorp Inc NY Sunrise Bancorp Inc NY Purch. 611,933 10.90 1.09% 10.02% 0.50 65.45
05/16/95 Independence Cmty NY Bay Ridge Bancorp NY Purch. 587,904 17.42 1.60% 9.16% 3.87 64.35
04/12/95 USBC Holdings Plc FO United Northern Bncp NY Purch. 88,848 7.56 0.74% 9.43% 3.24 NA
04/03/95 Reliance Bancorp Inc NY Bank of Westbury NY Purch. 185,431 5.79 0.57% 9.80% 0.81 NA
01/26/95 Valley Nat'l Bancorp NJ Lakeland First Finl NJ Pooling 661,393 7.49 1.33% 17.17% 1.26 NA
01/19/95 USB Financial NJ Bancorp New Jersey NJ Purch. 480,371 10.51 0.90% 8.47% 1.52 NA
Average 1,713,075 8.77 0.91% 10.41% 2.52 64.91
Median 643,180 7.81 0.90% 9.88% 1.16 56.87
<CAPTION>
Deal Terms at Announcement Deal Pricing at Announcement
---------------------------- ---------------------------------------------
Deal Deal Pr/ Pr/ Pr/ TB Prem/
Announce Value Price Per Consider Pr/Bk Tg Bk Assets 4-Qtr Core Deps
Date ($M) Share ($) Type (%) (%) (%) EPS (x) (%)
- -------- ----- --------- -------- ------ ------ ------ ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
05/21/97 647.5 42.315 Stock 198.10 203.24 16.06 17.06 16.09
04/25/97 13.0 272.500 Cash 169.14 170.51 15.81 13.13 10.41
03/31/97 344.6 18.938 Mixture 167.44 167.44 13.56 24.59 8.48
02/28/97 880.0 42.513 Stock 230.42 256.57 15.87 18.25 16.76
02/06/97 322.7 25.500 Stock 168.32 171.49 13.85 15.27 8.90
12/03/96 91.8 52.000 Cash 169.31 169.31 14.27 9.94 10.34
08/22/96 652.0 NA Cash 163.00 165.06 8.87 12.82 6.14
07/15/96 216.3 42.790 Stock 168.46 170.07 13.69 11.76 7.98
06/25/96 69.2 16.691 Stock 164.12 173.68 10.39 NA 6.81
05/22/96 93.7 33.797 Stock 162.17 174.03 20.00 17.24 11.57
02/15/96 5.6 14.140 Cash 141.84 141.84 7.59 25.93 2.60
11/03/95 105.1 21.250 Cash 122.34 122.34 21.66 25.91 7.75
02/24/95 529.6 41.500 Cash 140.68 140.68 12.79 14.46 4.78
07/31/95 112.8 32.000 Cash 159.05 159.05 18.43 15.24 10.37
05/16/95 131.4 22.000 Cash 127.83 127.83 22.35 13.33 7.32
04/12/95 9.3 NA Cash 133.12 138.46 10.47 14.11 3.89
04/03/95 16.7 37.720 Cash 154.09 155.54 9.01 15.73 4.09
01/26/95 130.2 32.762 Stock 248.39 257.36 19.69 14.69 16.34
01/19/95 97.7 43.100 Mixture 191.81 193.80 20.34 22.64 11.48
235.2 46.560 167.35 171.49 14.98 16.78 9.06
112.8 33.797 164.12 169.38 14.27 15.26 8.48
</TABLE>
Source: SNL Securities
<PAGE> 210
EXHIBIT IV-5
DIRECTORS AND SENIOR MANAGEMENT SUMMARY RESUMES
<PAGE> 211
Harold Banks. Mr. Banks is a cemetarian and Executive Director,
Secretary and Treasurer of Ocean View The Cemetery Beautiful, Staten Island,
New York, since 1979. Mr. Banks also serves on the Boards of the Elmweir
Cemetery Association and Mt. Zion Cemetery.
Charles J. Bartels. Mr. Bartels is President and Chief Executive
Officer of Bartels & Eleford, Inc., a real estate appraisal firm located in
Staten Island, New York.
James R. Coyle. Mr. Coyle has served as President and Chief Operating
Officer of the Bank since June 1990. Previously, Mr. Coyle served as Executive
Vice President from 1987 to 1990 and as Chief Financial Officer from 1989 to
1990. Mr. Coyle has been employed by the Bank since 1970. Mr. Coyle is a
member of the Board of the Center for Financial Studies, Fairfield, Connecticut,
and is a member of the Community Bankers Association of New York State
("CBANYS").
Harry P. Doherty. Mr. Doherty has served as Chairman of the Board and
Chief Executive Officer of the Bank since May 1990. Previously, Mr. Doherty
served as President and Chief Operating Officer from 1989 to 1990 and Executive
Vice President from 1987 to 1989. Mr. Doherty has been employed by the Bank
since 1966. Mr. Doherty serves as a director of the Institutional Investors
Capital Appreciation Mutual Fund as well as the MSB Fund. Mr. Doherty
currently is serving as Chairman of CBANYS and as a director of America's
Community Bankers ("ACB").
William G. Horn. Mr. Horn is currently retired. Previously, Mr. Horn
was a Senior Account Agent for the Allstate Insurance Company.
Dennis P. Kelleher. Mr. Kelleher is Chief Executive Officer of Wall
Street Access (formerly Wall Street Investors Services), a financial services
company and member firm of the NYSE, located in New York City. Mr. Kelleher
also serves as a director of the Irish Investment Fund, a closed end investment
company listed on the NYSE having a main investment focus in Irish-based
securities.
Julius Mehrberg. Mr. Mehrberg is a principal and partner in various
real estate development and management companies, primarily Fingerboard Estates
Corp., located in Staten Island, New York.
John R. Morris. Mr. Morris retired from Merrill Lynch in May 1997
where he served as a Vice President of the Capital Markets and Private Client
groups. Mr. Morris has over 35 years of experience in the financial services
area. Mr. Morris currently is a private investor and is self-employed as a
consultant.
Kenneth W. Nelson. Mr. Nelson is President and Chief Executive
Officer of Tech Products, Inc., a manufacturing and marketing company located
in Staten Island, New York. Mr. Nelson is also Chairman of Methods Research
Corp., importing and marketing company located in Farmingdale, New Jersey, and
President and Chief Executive Officer of Carey Realty Corp., a real estate
holding company located in Staten Island, New York. Mr. Nelson also serves as
a director of American Centurion Life Assurance Co., a subsidiary of American
Express Insurance and Annuities, and of First Fortis Life Insurance Company, a
subsidiary of Fortis, Inc. Insurance and Annuities.
William E. O'Mara. Mr. O'Mara is a partner in the firm of Wohl and
O'Mara, civil engineers and land surveyors, located in Staten Island, New York.
<PAGE> 212
EXECUTIVE OFFICERS WHO ARE NOT TRUSTEES
Set forth below is information with respect to the principal
occupations during the last five years for the executive officers of the Bank
who do not serve as trustees.
John P. Brady. Age 46 years. Mr. Brady has served as Executive Vice
President and Chief Lending Officer of the Bank since May 1987. Mr. Brady has
been employed by the Bank since 1982 and previously served as Vice President
and mortgage officer and as the Community Reinvestment Act officer for the
Bank.
Frank J. Besignano. Age 42 years. Mr. Besignano has served as Senior
Vice President of the Bank for Marketing, Business Development and Compliance
since May 1991. Mr. Besignano has been employed by the Bank since 1982 and
previously served as Vice President and marketing officer since 1987.
Edward J. Klingele. Age 44 years. Mr. Klingele has served as Senior
Vice President and Chief Financial Officer of the Bank since May 1990. Mr.
Klingele has been employed by the Bank since 1976 and previously served as
Controller of the Bank from 1984 to 1990.
Deborah Pagano. Age 42 years. Ms. Pagano has served as Senior Vice
President - Branch Administration for the Bank since May 1989. Ms. Pagano has
been employed by the Bank since 1976 and previously served as Vice President
of the Bank from 1984 to 1989.
Donald C. Fleming. Age 48 years. Mr. Fleming has served as Senior
Vice President of the Bank for Strategic Planning and Technical Services since
January 1997. Previously, Mr. Fleming served as Director, Executive Vice
President and Chief Financial Officer of North Side Savings Bank, Floral Park,
New York, from 1988 to 1996.
<PAGE> 213
EXHIBIT IV-6
Pro Forma Analysis Sheet
<PAGE> 214
EXHIBIT IV-6
PRO FORMA ANALYSIS SHEET
Staten Island Savings Bank
Prices as of July 17, 1997
<TABLE>
<CAPTION>
All Savings
Peer Group New York Companies Institutions
------------------- ---------------------- --------------
Price Multiple Symbol Subject (1) Mean Median Mean Median Mean
- -------------- ------ ----------- ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Price-core earnings ratio P/Core 12.58 x 16.12x 15.06x 18.89x 18.44x 18.38x
Price-tangible book ratio = P/TB 75.42% 164.79 163.70% 141.13% 141.39% 141.92%
Price-assets ratio = P/A 15.32% 17.42% 13.07% 17.49% 14.66% 17.01%
Valuation Parameters
- --------------------
</TABLE>
<TABLE>
<S> <C> <C>
Pre-Conversion Earnings (Y) $21,795,000 ESOP Stock Purchases (E) 8.00%(5)
Pre Conversion Core Earnings $19,703,000 Cost of ESOP Borrowings (S) 0.00%(4)
Pre-Conversion Book Value (B) $177,295,000 ESOP Amortization (T) 15.00 years
Pre-Conv. Tang. Book Value (B) $157,497,000 RRP Amount (M) 4.00%
Pre-Conversion Assets (A) $1,848,295,000 RRP Vesting (N) 5.00 years (5)
Reinvestment Rate (2)(R) 3.12% Foundation (F) 5.00%
Est. Conversion Expenses (3)(X) 2.01% Tax Benefit (Z) 7,273,810
Tax rate (TAX) 47.00% Percentage Sold (PCT) 100.00%
</TABLE>
<TABLE>
<S> <C>
Calculation of Pro Forma Value After Conversion
- ------------------------------------------------
1. V= P/E * (Y) V= $325,000,000
----------------------------------------------------------
1 - P/E * PCT * ((1-X-E-M-F)*R - (1-TAX)*E/T - (1-TAX)*M/N)
2. V= P/B * (B+Z) V= $325,000,000
---------------------------------
1 - P/B * PCT * (1-X-E-M-F)
3. V= P/A * (A+Z) V= $325,000,000
---------------------------------
1 - P/A * PCT * (1-X-E-M-F)
</TABLE>
<TABLE>
<CAPTION>
Shares Aggregate
Shares Sold to Price Gross Offering Issued To Total Shares Market Value
Conclusion Public Share Proceeds Foundation Issued of Stock Issued
- ---------- ------ ----- -------- ---------- ------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Minimum 26,309,524 10.00 $263,095,240 1,315,476 27,625,000 276,250,000
Midpoint 30,952,381 10.00 309,523,810 1,547,619 32,500,000 325,000,000
Maximum 35,595,238 10.00 355,952,380 1,779,762 37,375,000 373,750,000
Supermaximum 40,934,524 10.00 409,345,240 2,046,726 42,981,250 429,812,500
</TABLE>
- -------------------------------------------------------------
(1) Pricing ratios shown reflect the midpoint value.
(2) Net return reflects a reinvestment rate of 5.89 percent, and a tax rate of
47.00 percent.
(3) Offering expenses shown at estimated midpoint value.
(4) No cost is applicable since holding company will fund the ESOP loan.
(5) ESOP and MRP amortize over 20 years and 5 years, respectively;
amortizationexpenses tax effected at 47.00 percent.
<PAGE> 215
EXHIBIT IV-7
Pro Forma Effect of Conversion Proceeds
<PAGE> 216
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Staten Island Savings Bank
At the Minimum
<TABLE>
<S> <C>
1. Offering Proceeds $263,095,240
Less: Estimated Offering Expenses 5,726,048
---------
Net Conversion Proceeds $257,369,192
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $257,369,192
Less: Proceeds Invested in Non-Earning Fixed Assets 0
Less: Non-Cash Stock Purchases (1) 31,571,429
----------
Net Proceeds Reinvested $225,797,763
Estimated net incremental rate of return 3.12%
-----
Earnings Increase $7,048,729
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 743,683
Less: Recognition Plan Vesting (4) 1,115,524
---------
Net Earnings Increase $5,189,522
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended April 30, 1997 (reported) $21,795,000 $5,189,522 $26,984,522
12 Months ended April 30, 1997 (core) $19,703,000 $5,189,522 $24,892,522
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
April 30, 1997 $177,295,000 $225,797,763 $6,182,738 $409,275,501
April 30, 1997 (Tangible) $157,497,000 $225,797,763 $6,182,738 $389,477,501
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
April 30, 1997 $1,848,295,000 $225,797,763 $6,182,738 $2,080,275,501
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 15 years, amortization expense is
tax-effected at a 47.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected
at 47.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE> 217
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Staten Island Savings Bank
At the Midpoint
<TABLE>
<S> <C>
1. Offering Proceeds $309,523,810
Less: Estimated Offering Expenses 6,217,262
---------
Net Conversion Proceeds $303,306,548
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $303,306,548
Less: Proceeds Invested in Non-Earning Fixed Assets 0
Less: Non-Cash Stock Purchases (1) 37,142,857
----------
Net Proceeds Reinvested $266,163,690
Estimated net incremental rate of return 3.12%
-----
Earnings Increase $8,308,832
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 874,921
Less: Recognition Plan Vesting (4) 1,312,381
---------
Net Earnings Increase $6,121,530
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended April 30, 1997 (reported) $21,795,000 $6,121,530 $27,916,530
12 Months ended April 30, 1997 (core) $19,703,000 $6,121,530 $25,824,530
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
April 30, 1997 $177,295,000 $266,163,690 $7,273,810 $450,732,500
April 30, 1997 (Tangible) $157,497,000 $266,163,690 $7,273,810 $430,934,500
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
April 30, 1997 $1,848,295,000 $266,163,690 $7,273,810 $2,121,732,500
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 15 years, amortization expense is
tax-effected at a 47.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected
at 47.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE> 218
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Staten Island Savings Bank
At the Maximum
<TABLE>
<S> <C>
1. Offering Proceeds $355,952,380
Less: Estimated Offering Expenses 6,708,476
---------
Net Conversion Proceeds $349,243,904
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $349,243,904
Less: Proceeds Invested in Non-Earning Fixed Assets 0
Less: Non-Cash Stock Purchases (1) 42,714,286
----------
Net Proceeds Reinvested $306,529,618
Estimated net incremental rate of return 3.12%
-----
Earnings Increase $9,568,935
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 1,006,159
Less: Recognition Plan Vesting (4) 1,509,238
---------
Net Earnings Increase $7,053,538
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended April 30, 1997 (reported) $21,795,000 $7,053,538 $28,848,538
12 Months ended April 30, 1997 (core) $19,703,000 $7,053,538 $26,756,538
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
April 30, 1997 $177,295,000 $306,529,618 $8,364,881 $492,189,499
April 30, 1997 (Tangible) $157,497,000 $306,529,618 $8,364,881 $472,391,499
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
April 30, 1997 $1,848,295,000 $306,529,618 $8,364,881 $2,163,189,499
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 15 years, amortization expense is
tax-effected at a 47.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected
at 47.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE> 219
Exhibit IV-7
PRO FORMA EFFECT OF CONVERSION PROCEEDS
Staten Island Savings Bank
At the Supermaximum Value
<TABLE>
<S> <C>
1. Offering Proceeds $409,345,240
Less: Estimated Offering Expenses 7,273,373
---------
Net Conversion Proceeds $402,071,867
2. Estimated Additional Income from Conversion Proceeds
Net Conversion Proceeds $402,071,867
Less: Proceeds Invested in Non-Earning Fixed Assets 0
Less: Non-Cash Stock Purchases (1) 49,121,429
----------
Net Proceeds Reinvested $352,950,438
Estimated net incremental rate of return 3.12%
-----
Earnings Increase $11,018,054
Less: Estimated cost of ESOP borrowings (2) 0
Less: Amortization of ESOP borrowings (3) 1,157,083
Less: Recognition Plan Vesting (4) 1,735,624
---------
Net Earnings Increase $8,125,347
<CAPTION>
Net
Before Earnings After
3. Pro Forma Earnings Conversion Increase Conversion
---------- -------- ----------
<S> <C> <C> <C>
12 Months ended April 30, 1997 (reported) $21,795,000 $8,125,347 $29,920,347
12 Months ended April 30, 1997 (core) $19,703,000 $8,125,347 $27,828,347
<CAPTION>
Before Net Cash Tax Benefit (5) After
4. Pro Forma Net Worth Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
April 30, 1997 $177,295,000 $352,950,438 $9,619,613 $539,865,051
April 30, 1997 (Tangible) $157,497,000 $352,950,438 $9,619,613 $520,067,051
<CAPTION>
Before Net Cash Tax Benefit (5) After
5. Pro Forma Assets Conversion Proceeds Of Contribution Conversion
---------- -------- --------------- ----------
<S> <C> <C> <C> <C>
April 30, 1997 $1,848,295,000 $352,950,438 $9,619,613 $2,210,865,051
</TABLE>
(1) Includes ESOP and MRP stock purchases equal to 8.0 and 4.0 percent of the
offering, respectively.
(2) ESOP stock purchases are internally financed by a loan from the holding
company.
(3) ESOP borrowings are amortized over 15 years, amortization expense is
tax-effected at a 47.00 percent rate.
(4) MRP is amortized over 5 years, and amortization expense is tax effected
at 47.00 percent.
(5) Reflects tax benefit of stock contribution to the Foundation.
<PAGE> 220
EXHIBIT IV-8
Peer Group Core Earnings Analysis
<PAGE> 221
RP FINANCIAL, LC.
Financial Services Industry Consultants
1700 North Moore Street, Suite 2210
Arlington, Virginia 22209
(703) 528-1700
Core Earnings Analysis
Comparable Institution Analysis
For the Twelve Months Ended March 31, 1997
<TABLE>
<CAPTION>
Estimated
Net Income Less: Net Tax Effect Less: Extd Core Income Estimated
to Common Gains(Loss) @ 34% Items to Common Shares Core EPS
---------- ----------- ---------- ---------- ---------- ---------- -------
($000) ($000) $000) ($000) ($000) ($000) ($)
<S> <C> <C> <C> <C> <C> <C> <C>
Comparable Group
- ----------------
ALBK ALBANK Fin. Corp. of Albany NY 27,813 10,439 -3,549 0 34,703 12,819 2.71
DIME Dime Community Bancorp of NY 11,380 2,095 -712 0 12,763 13,126 0.97
FMCO FMS Financial Corp. of NJ 3,372 2,663 -905 0 5,130 2,388 2.15
FSPG First Home Bancorp of NJ 4,418 2,090 -711 0 5,797 2,708 2.14
FFIC Flushing Fin. Corp. of NY 6,942 355 -121 0 7,176 8,088 0.89
HAVN Haven Bancorp of Woodhaven NY 9,872 6,828 -2,322 0 14,378 4,330 3.32
IBSF IBS Financial Corp. of NJ 3,898 4,067 -1,383 0 6,582 11,012 0.60
JSBF JSB Financial, Inc. of NY 27,095 -2,069 703 0 25,729 9,830 2.62
OCFC Ocean Fin. Corp. of NJ -586 19,037 -6,473 -165 11,813 9,059 1.30
PFSB PennFed Fin. Services of NJ 6,512 4,813 -1,636 0 9,689 4,821 2.01
PSBK Progressive Bank, Inc. of NY 9,502 63 -21 0 9,544 3,825 2.50
PULS Pulse Bancorp of S. River NJ 3,587 2,700 -918 0 5,369 3,061 1.75
QCSB Queens County Bancorp of NY 22,812 418 -142 0 23,088 11,137 2.07
RELY Reliance Bancorp, Inc. of NY 10,197 8,078 -2,747 0 15,528 8,823 1.76
SFIN Statewide Fin. Corp. of NJ 3,351 3,744 -1,273 0 5,822 4,771 1.22
ROSE T R Financial Corp. of NY 31,095 -5,854 1,990 0 27,231 17,632 1.54
</TABLE>
Source: Audited and unaudited financial statements, corporate reports and
offering circulars, and RP Financial, LC. calculations. The
information provided in this table has been obtained from sources we
believe are reliable, but we cannot guarantee the accuracy or
completeness of such information.
Copyright (c) 1997 by RP Financial, LC.
<PAGE> 222
EXHIBIT IV-9
Pro Forma Regulatory Capital Ratios
<PAGE> 223
<TABLE>
<CAPTION>
Pro Forma at April 30, 1997 Based on
-------------------------------------------------------
26,309,524 30,952,381
Shares Sold Shares Sold
Historical at at $10.00 at $10.00
April 30, 1997 Per Share Per Share
------------------------ -------------------------- --------------------------
Percent of Percent of Percent of
Amount Assets(1) Amount Assets(1) Amount Assets(1)
---------- ---------- -------- ----------- -------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible capital(2):
Actual . . . . . . . . $154,040 8.44% $257,336 13.20% $275,824 13.99%
Requirement . . . . . . 27,376 1.50 29,241 1.50 29,574 1.50
-------- ----- -------- ----- -------- -----
Excess . . . . . . . . $126,664 6.94% $228,095 11.70% $246,251 12.49%
======== ===== ======== ===== ======== =====
Core capital(2)(3):
Actual . . . . . . . . $173,838 9.53% $277,134 14.22% $295,622 14.99%
Requirement . . . . . . 54,751 3.00 58,482 3.00 59,148 3.00
-------- ----- -------- ----- -------- -----
Excess . . . . . . . . $119,087 6.53% $218,652 11.22% $236,475 11.99%
======== ===== ======== ===== ======== =====
Risk-based capital(2)(3):
Actual . . . . . . . . $164,539 19.59% $267,835 29.69% $286,323 31.35%
Requirement . . . . . . 67,195 8.00 72,168 8.00 73,056 8.00
-------- ----- -------- ----- -------- -----
Excess . . . . . . . . $ 97,344 11.59% $195,667 21.69% $213,267 23.35%
======== ===== ======== ===== ======== =====
</TABLE>
<TABLE>
<CAPTION>
Pro Forma at April 30, 1997 Based on
---------------------------------------------------
35,595,238 40,934,524
Shares Sold Shares Sold
at $10.00 at $10.00
Per Share Per Share
------------------------- -----------------------
Percent of Percent of
Amount Assets(1) Amount Assets(1)
---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Tangible capital(2):
Actual . . . . . . . . $294,313 14.76% $315,574 15.63%
Requirement . . . . . . 29,907 1.50 30,290 1.50
-------- ----- -------- -----
Excess . . . . . . . . $264,406 13.26% $285,284 14.13%
======== ===== ======== =====
Core capital(2)(3):
Actual . . . . . . . . $314,111 15.75% $335,372 16.61%
Requirement . . . . . . 59,814 3.00 60,580 3.00
-------- ----- -------- -----
Excess . . . . . . . . $254,297 12.75% $274,793 13.61%
======== ===== ======== =====
Risk-based capital(2)(3):
Actual . . . . . . . . $304,812 32.98% $326,073 34.80%
Requirement . . . . . . 73,945 8.00 74,966 8.00
-------- ----- -------- -----
Excess . . . . . . . . $230,867 24.98% $251,107 26.80%
======== ===== ======== =====
</TABLE>
- ---------------------------------
(1) Adjusted total or adjusted risk-weighted assets, as appropriate.
(2) Based on the OTS regulatory capital requirements which became
applicable to the Bank upon its conversion to a federal savings bank
in July 1997.
(3) Does not reflect the interest rate risk component to be added to the
risk-based capital requirements or, in the case of the core capital
requirement, the 4.0% requirement to be met in order for an
institution to be "adequately capitalized" under applicable laws and
regulations. See "Regulation - Regulation of Federal Savings Banks -
Regulatory Capital Requirements."
32
<PAGE> 224
EXHIBIT V-1
RP Financial, LC.
Firm Qualifications Statement
<PAGE> 225
RP FINANCIAL, LC.
Financial Services Industry Consultants FIRM QUALIFICATION STATEMENT
RP Financial provides financial and management consulting and valuation services
to the financial services industry nationwide, particularly federally-insured
financial institutions. RP Financial establishes long-term client relationships
through as wide array of services, emphasis on quality and timeliness, hands-on
involvement by our principals and senior consulting staff, and careful
structuring of strategic plans and transactions. RP Financial's staff draws from
backgrounds in consulting, regulatory agencies and investment banking, thereby
providing our clients with considerable resources.
STRATEGIC AND CAPITAL PLANNING
RP Financial's stategic and capital planning services are designed to provide
effective workable plans with quantifiable results. Through a program known as
SAFE (Strategic Alternatives Financial Evaluations), RP Financial analyzes
strategic options to enhance shareholder value or other established objectives.
Our planning services involve conducting situation analyses; establishing
mission statements, stategic goals and objectives, and identifying strategies
for enhancement of franchise value, capital management and planning, earnings
improvement and operational issues. Strategy development typically includes the
following areas: capital formation and management asset/liability targets,
profitability, return an equity and market value of stock. Our proprietary
financial simulation model provides the basis for evaluating the fiscal impact
of alternative strategies and assessing the feasibility/compatibility of such
strategies with regulations and/or other guidelines.
MERGER AND ACQUISITION SERVICES
RP Financial's merger and acquisition (M&A) services include targeting
candidates and potential acquirors, assessing acquisition merit, conducting
detailed due diligence, negotiating and structuring transactions, preparing
merger business plans and financial simulations, rendering fairness opinions and
assisting in implementing post-acquisition strategies. Through our financial
simulations, comprehensive in-house data bases, valuation expertise and
regulatory knowledge, RP Financial's M&A consulting focuses on structuring
transactions to enhance shareholder returns.
VALUATION SERVICES
RP Financial's extensive valuation practice includes variations for a variety of
purposes including mergers and acquisitions, mutual-to-stock conversions,
ESOPs, subsidiary companies, mark-to-market transactions, loan and servicing
portfolios, non-traded securities, core deposits, FAS 107 (fair market value
disclosure), FAS 122 (loan servicing rights) and FAS 123 (stock options). Our
principals and staff are highly experienced in performing valuation appraisals
which conform with regulatory guidelines and appraisal industry standards. RP
financial is the nation's leading valuation firm for mutual-to-stock
conversions of thrift institutions.
OTHER CONSULTING SERVICES AND DATA BASES
R.P Financial offers a variety of other services including branching strategies,
feasibility studies and special research studies, which are complemented by our
quantitative and computer skills. RP Financial's consult' services are aided by
its in-house data base resources for commercial banks and savings institutions
and proprietary valuation and financial simulation models.
YEAR 2000 SERVICES
RP Financial, through a relationship with a computer research and development
company with a proprietary methodology, offers Year 2000 advisory and conversion
services to financial institutions which are more cost effective and less
disruptive than most other providers of such service.
RP Financial's Key Personnel (Years of Relevant Experience)
Ronald S. Riggins, Managing Director(17)
William E. Pommerening, Managing Director(13)
Gregory E. Dunn, Senior Vice President(15)
James P. Hennessey, Senior Vice President(12)
James J. Oren, Vice President(10)
Timothy M. Biddle, Vice President(8)
WASHINGTON HEADQUARTERS
Rosslyn Center
1700 North Moore Street, Suite 2210 Telephone: (703) 528-1700
Arlington, VA 22209 Fax No.: (703) 528-1788
<PAGE> 1
Exhibit 99.2
PROXY CARD
STATEN ISLAND BANCORP, INC.
Proposed Holding Company for Staten Island Savings Bank
Stock Sales Center
45 Beach Street
Staten Island, New York 10304
(718) xxx-xxxx
STOCK ORDER FORM
- --------------------------------------------------------------------------------
DEADLINE The Subscription Offering ends at Noon, Eastern Time, on October xx,
1997. Your original Stock Order and Certification Form, properly executed and
with the correct payment, must be received at the address on the top of this
form by this deadline, or it will be considered void.
- --------------------------------------------------------------------------------
(1) Number of Shares Price Per Share (2) Total Amount Due
- -------------------- --------------------
x $10.00 = $
- -------------------- --------------------
The minimum number of shares that may be subscribed for is 25. The maximum
individual subscription is 30,000 shares. No person, together with associates
and persons acting in concert with such person may purchase more than 1.0% of
the Common Stock sold in the Conversion.
- --------------------------------------------------------------------------------
METHOD OF PAYMENT
(3)[ ] Enclosed is a check, bank draft or money order payable to Staten Island
Bancorp, Inc. for $_________________ (or cash if presented in person).
(4)[ ] I authorize Staten Island Savings Bank to make withdrawals from my
Staten Island Savings Bank certificate or savings account (s) shown
below, and understand that the amounts will not otherwise be available
for withdrawal:
ACCOUNT NUMBER (S) AMOUNT (S)
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
----------------------------------------------------------
TOTAL WITHDRAWAL
--------------------------
- --------------------------------------------------------------------------------
(5) [ ] Check here if you are a DIRECTOR, OFFICER or EMPLOYEE of Staten Island
Savings Bank or a member of such person's immediate family.
- --------------------------------------------------------------------------------
(6) [ ] ASSOCIATE - ACTING IN CONCERT
Check here, and complete the reverse side of this form, if you or any
associates (as defined on the reverse side of this form) or persons acting in
concert with you have submitted other orders for shares in the Subscription
and/or Community Offerings.
- --------------------------------------------------------------------------------
(7) PURCHASER INFORMATION (additional space on back of form)
a.[ ] Eligible Account Holder - Check here if you were a depositor with $50.00
or more on deposit with Staten Island Savings Bank as of March 31, 1996.
Enter information below for all deposit accounts that you had at Staten
Island Savings Bank on March 31, 1996.
b.[ ] Supplemental Eligible Account Holder - Check here if you were a depositor
with $50.00 or more on deposit with Staten Island Savings Bank as of June
30, 1997, but are not an Eligible Account Holder. Enter information
below for all deposit accounts that you had at Staten Island Savings
Bank on June 30, 1997
c.[ ] Other Member - Check here if you were a depositor with $50.00 or more on
deposit with Staten Island Savings Bank as of XXXX xx, 1997, but are not
an Eligible Account Holder or a Supplemental Eligible Account Holder.
Enter information below for all deposit accounts that you had at Staten
Island Savings Bank on xxxxx xx, 1997
d.[ ] Local Community - Check here if you are a permanent resident of Richmond
or Kings Counties, New York.
ACCOUNT TITLE (NAMES ON ACCOUNTS) ACCOUNT NUMBER
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(8) STOCK REGISTRATION
<TABLE>
<S> <C> <C>
[ ] Individual [ ] Uniform Transfer to Minors [ ] Partnership
[ ] Joint Tenants [ ] Uniform Gift to Minors [ ] Individual Retirement Account
[ ] Tenants in Common [ ] Corporation [ ] Fiduciary/Trust (Under Agreement Dated _________________)
</TABLE>
- --------------------------------------------------------------------------------
Name Social Security or Tax I.D.
- --------------------------------------------------------------------------------
Name Social Security or Tax I.D.
- --------------------------------------------------------------------------------
Street Address Daytime Telephone
- --------------------------------------------------------------------------------
City State Zip Code Evening Telephone
- --------------------------------------------------------------------------------
[ ] NASD AFFILIATION (This section only applies to those individuals who meet
the delineated criteria)
Check here if you are a member of the National Association of
Securities Dealers, Inc. ("NASD"), a person associated with an NASD member, a
member of the immediate family of any such person to whose support such person
contributes, directly or indirectly, or the holder of an account in which an
NASD member or person associated with an NASD member has a beneficial interest.
To comply with conditions under which an exemption from the NASD's
Interpretation With Respect to Free-Riding and Withholding is available, you
agree, if you have checked the NASD affiliation box: (1) not to sell, transfer
or hypothecate the stock for a period of three months following the issuance
and (2) to report this subscription in writing to the applicable NASD member
within one day of the payment therefor.
- --------------------------------------------------------------------------------
ACKNOWLEDGMENT By signing below, I acknowledge receipt of the Prospectus
dated September xx, 1997 and understand I may not change or revoke my order
once it is received by Staten Island Bancorp, Inc. I also certify that this
stock order is for my account and there is no agreement or understanding
regarding any further sale or transfer of these shares. Federal regulations
prohibit any persons from transferring, or entering into any agreement directly
or indirectly to transfer, the legal or beneficial ownership of conversion
subscription rights or the underlying securities to the account of another
person. Staten Island Savings Bank will pursue any and all legal and equitable
remedies in the event it becomes aware of the transfer of subscription rights
and will not honor orders known by it to involve such transfer. Under
penalties of perjury, I further certify that: (1) the social security number or
taxpayer identification number given above is correct; and (2) I am not subject
to backup withholding. You must cross out this item, (2) above, if you have
been notified by the Internal Revenue Service that you are subject to backup
withholding because of under-reporting interest or dividends on your tax
return. By signing below, I also acknowledge that I have not waived any
rights under the Securities Act of 1933 and the Securities Exchange Act of
1934.
SIGNATURE THIS FORM MUST BE SIGNED AND DATED TWICE: HERE AND ON THE
CERTIFICATION FORM ON THE REVERSE HEREOF. THIS ORDER IS NOT VALID IF THE
STOCK ORDER FORM AND CERTIFICATION FORM ARE NOT BOTH SIGNED. YOUR ORDER WILL
BE FILLED IN ACCORDANCE WITH THE PROVISIONS OF THE PROSPECTUS. When purchasing
as a custodian, corporate officer, etc., include your full title. An additional
signature is required only if payment is by withdrawal from an account that
requires more than one signature to withdraw funds.
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE NOT SAVINGS ACCOUNTS AND ARE NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE SAVINGS
ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY.
- ------------------------------------------------------------------------
Signature Title (if applicable) Date
- ------------------------------------------------------------------------
Signature Title (if applicable) Date
- ------------------------------------------------------------------------
FOR OFFICE Date Rec'd _____/____/_____ Order # _______
USE Check # __________________ Category _______
Batch # _____ Amount $ __________________ Deposit $ _______
- ------------------------------------------------------------------------
<PAGE> 2
PROXY CARD
STATEN ISLAND BANCORP, INC.
Proposed Holding Company for Staten Island Savings Bank
- --------------------------------------------------------------------------------
ITEM (6) CONTINUED; ASSOCIATE - ACTING IN CONCERT
ASSOCIATES LISTED ON NUMBER OF
OTHER STOCK ORDERS SHARES ORDERED
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- --------------------------------------------------------------------------------
ITEM (7) CONTINUED; PURCHASER INFORMATION
ACCOUNT TITLE (NAMES ON ACCOUNTS) ACCOUNT NUMBER
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
- ------------------------------------------------------------
DEFINITION OF ASSOCIATE
The term "associate" of a person is defined to mean (i) any corporation or
other organization (other than Staten Island Bancorp, Inc.. ("Company"),
Staten Island Savings Bank ("Staten Island Savings"), or a majority owned
subsidiary of Staten Island Savings) of which such person is a director,
officer or partner or is directly or indirectly the beneficial owner of 10% or
more of any class of equity securities; (ii) any trust or other estate in which
such person has a substantial beneficial interest or as to which such person
serves as trustee or in a similar fiduciary capacity, provided, however, that
such term shall not include any tax-qualified employee stock benefit plan of
the Company or Staten Island Savings in which such person has a substantial
beneficial interest or serves as a trustee or in a similar fiduciary capacity;
and (iii) any relative or spouse of such person, or any relative of such
person, who either has the same home as such person or who is a director or
officer of the Company or Staten Island Savings or any of their subsidiaries.
- --------------------------------------------------------------------------------
CERTIFICATION FORM
(This Certification Must Be Signed In Addition
to the Stock Order Form On Reverse Hereof)
I ACKNOWLEDGE THAT THE SHARES OF COMMON STOCK, $0.01 PAR VALUE PER SHARE, OF
STATEN ISLAND BANCORP, INC. IS NOT A DEPOSIT OR AN ACCOUNT AND IS NOT FEDERALLY
INSURED, AND IS NOT GUARANTEED BY STATEN ISLAND SAVINGS BANK OR BY THE FEDERAL
GOVERNMENT.
If anyone asserts that the shares of Common Stock are federally insured or
guaranteed, or are as safe as an insured deposit, I should call the Office of
Thrift Supervision Northeastern Regional Director, Robert C. Albanese, at (201)
413-1000.
I further certify that, before purchasing the shares of Common Stock of Staten
Island Bancorp, Inc. I received a copy of the Prospectus dated, September xx,
1997 which discloses the nature of the shares of Common Stock being offered
thereby and describes the following risks involved in an investment in the
Common Stock under the heading "Risk Factors" beginning on page 13 of the
Prospectus:
1. Potential Low Return on Equity Following the Conversion;
Uncertainty as to Future Growth Opportunities
2. Establishment of the Foundation
3. Potential Effects of Changes in Interest Rates and the Current
Interest Rate Environment
4. Risks Related to Commercial Real Estate Loans, Construction and
Land Loans and Commercial Business Loans
5. Strong Competition Within the Bank's Market Area
6. Geographic Concentration of Loans
7. Certain Anti-Takeover Provisions
8. Legislation Limiting Deduction of Bad Debt Reserves
9. Regulatory Oversight and Legislation
10. Absence of Market for the Common Stock
11. Possible Increase in Number of Shares Issued in the Conversion
12. Possible Dilutive Effect of Issuance of Additional Shares
13. Possible Increased Compensation Expense After the Conversion
14. Possible Adverse Income Tax Consequences of the Distribution of
Subscription Rights
15. Irrevocability of Orders; Potential Delay in Completion of
Offerings
- -------------------------------------- --------------------------------------
Signature Date Signature Date
- -------------------------------------- --------------------------------------
(NOTE: IF STOCK IS TO BE HELD JOINTLY, BOTH PARTIES MUST SIGN)
<PAGE> 3
STATEN ISLAND BANCORP, INC.
Stock Ownership Guide and Stock Order Form Instructions
STOCK ORDER FORM INSTRUCTIONS
- --------------------------------------------------------------------------------
ITEM 1 AND 2 - Fill in the number of shares that you wish to purchase and the
total payment due. The amount due is determined by multiplying the number of
shares ordered bye subscription price of $10.00 per share. The minimum
purchase is 25 shares. The maximum individual subscription 30,000 shares. No
person, together with associates and persons acting in concert with such person
may purchase more than 1% of the Common Stock sold in the Conversion. Staten
Island Bancorp, Inc. reserves the right to reject the subscription of any order
received in the Community Offering, if any, in whole or in part.
ITEM 3 - Payment for shares may be made in cash (only if delivered by you in
person), by check, bank draft or money order payable to Staten Island Bancorp,
Inc. DO NOT MAIL CASH. Your funds will earn interest at Staten Island
Saving's current passbook rate of 2.85%.
ITEM 4 - To pay by withdrawal from a savings account or certificate at Staten
Island Savings, insert the account number(s) and the amount(s) you wish to
withdraw from each account. If more than one signature is required to
withdraw, each must sign in the signature box on the front of this form. To
withdraw from an account with checking privileges, please write a check. No
early withdrawal penalty will be charged on funds used to purchase stock. A
hold will be placed on the account(s) for the amount(s) you show. Payments
will remain in account(s) until the stock offering closes. If a partial
withdrawal reduces the balance of a certificate account to less than the
applicable minimum, the remaining balance will thereafter earn interest at the
passbook rate.
ITEM 5 - Please check this box to indicate whether you are a director, officer
or employee of Staten Island Savings Bank, FSB or a member of such person's
immediate family
ITEM 6 - Please check this box if you or any associate (as defined on the
reverse side of the Stock Order Form) or person acting in concert with you has
submitted another order for shares and complete the reverse side of the Stock
Order Form.
ITEM 7 - Please check the appropriate box if you were:
a) A depositor with $50.00 or more on deposit at Staten Island
Savings as of March 31, 1996. Enter information below for all
deposit accounts that you had at Staten Island Savings on
March 31, 1996.
b) A depositor with $50.00 or more on deposit at Staten Island
Savings as of June 30, 1997, but are not an Eligible Account
Holder. Enter information below for all deposit accounts that
you had at Staten Island Savings on June 30, 1997.
c) A depositor of Staten Island Savings as of XXXX xx, 1997 but
are not an Eligible Account Holder or a Supplemental Eligible
Account Holder. Enter information below for all deposit
accounts that you had at Staten Island Savings on XXXX xx,
1997.
d) A permanent resident of Richmond or Kings Counties, New York.
ITEM 8 - The stock transfer industry has developed a uniform system of
shareholder registrations that we will use in the issuance of Staten Island
Bancorp, Inc. common stock. Please complete this section as fully and
accurately as possible, and be certain to supply your social security or Tax
I.D. number(s) and your daytime and evening phone numbers. We will need to
call you if we can not execute you order as given. If you have any questions
regarding the registration of your stock, please consult your legal advisor.
Subscription rights are not transferable. If you are a qualified member, to
protect your priority over other purchasers as described in the Prospectus, you
must take ownership in at least one of the account holder's names.
STOCK OWNERSHIP GUIDE
- --------------------------------------------------------------------------------
INDIVIDUAL - The Stock is to be registered in an individual's name only, You
man not list beneficiaries for this ownership
JOINT TENANTS - Joint tenants with rights of survivorship identifies two or
more owners. When stock is held by joint tenants with rights of survivorship,
ownership automatically passes to the surviving joint tenant(s) upon the death
of any joint tenant. You may not list beneficiaries for this ownership.
TENANTS IN COMMON - Tenants in common may also identify two or more owners.
When stock is to be held by tenants in common, upon the death of one co-tenant,
ownership of the stock will be held by the surviving co-tenant(s) and by the
heirs of the deceased co-tenant. All parties must agree to the transfer or
sale of shares held by tenants in common. You may not list beneficiaries for
this ownership.
UNIFORM GIFT TO MINORS - For residents of many states, stock may by held in the
name of a custodian for the benefit of a minor under the Uniform Gift to Minors
Act. For residents in other states, stock may be held in a similar type of
ownership under the Uniform Transfer to Minors Act of the individual state.
For either ownership, the minor is the actual owner of the stock with the adult
custodian being responsible for the investment until the child reaches legal
age. Only one custodian and one minor may be designated.
Instructions: On the first name line, print the first name, middle initial and
last name of the custodian, with the abbreviation "CUST" after the name. Print
the first name, middle initial and last name of the minor on the second name
line. Use the minor's social security number.
CORPORATION/PARTNERSHIP - Corporation/Partnerships may purchase stock. Please
provide the Corporation/Partnership's legal name and Tax I.D. To have
depositor rights, the Corporation/Partnership must have an account in the legal
name. Please contact the Stock Sales Center to verify depositor rights and
purchase limitations.
INDIVIDUAL RETIREMENT ACCOUNT - Individual Retirement Account ("IRA") holders
may make stock purchases from their deposits through a prearranged
"trustee-to-trustee" transfer. Stock may only be held in a self-directed IRA.
Staten Island Savings does not offer a self-directed IRA. Please contact the
Stock Sales Center if you have any questions about your IRA account.
FIDUCIARY/TRUST - Generally, fiduciary relationships (such as Trusts, Estates,
Guardianships, etc.) are established under a form of trust agreement or
pursuant to a court order. Without legal document establishing a fiduciary
relationship, your stock may not be registered in a fiduciary capacity.
Instructions: On the first name line, print the first name, middle initial and
last name of the fiduciary if the fiduciary is an individual. If the
fiduciary is a corporation, list the corporate title on the first name line.
Following the name, print the fiduciary title such as trustee, executor,
personal representative, etc. On the second name line, print the name of the
maker , donor or testator or the name of the beneficiary. Following the name,
indicate the type of legal document establishing the fiduciary relationship
(agreement, court order, etc.). In the blank after "Under Agreement Dated",
fill in the date of the document governing the relationship. The date of the
document need not be provided for a trust created by a will.
<PAGE> 1
EXHIBIT 99.3
[KEEFE, BRUYETTE & WOODS, INC. LETTERHEAD]
TO MEMBERS AND FRIENDS OF STATEN ISLAND SAVINGS BANK
- --------------------------------------------------------------------------------
Keefe, Bruyette & Woods, Inc., a member of the National Association of
Securities Dealers, Inc. ("NASD"), is assisting Staten Island Savings Bank
("Staten Island Savings" or the "Bank") in its conversion from a
federally-chartered mutual savings bank to a federally-chartered stock savings
bank and the concurrent offering of common shares by Staten Island Bancorp, Inc.
(the "Company"), the newly formed corporation that will become the holding
company of the Bank following the Conversion.
At the request of the Company, we are enclosing materials explaining this
process and your options, including an opportunity to invest in the Company's
common stock being offered to the Banks' customers and the community through
XXXX xx, 1997. Please read the enclosed offering materials carefully. The
Company has asked us to forward these documents to you in view of certain
requirements of the securities laws in your state.
If you have any questions, please visit our Stock Sales Center at 45 Beach
Street, Staten Island, New York or feel free to call the Stock Sales Center at
(718) xxx-xxxx.
Very truly yours,
Keefe, Bruyette & Woods, Inc.
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE> 2
September XX, 1997
Dear Friend:
We are pleased to announce that Staten Island Savings Bank, ( "Staten
Island Savings" or the "Bank") is converting from a federally-chartered mutual
savings bank to a federally-chartered stock savings bank (the "Conversion"). In
conjunction with the Conversion, Staten Island Bancorp, Inc., (the "Company")
the newly-formed corporation that will serve as holding company for the Bank, is
offering shares of common stock in a subscription offering and community
offering. The sale of stock in connection with the Conversion support and
enhance the Bank's current operations.
Because we believe you may be interested in learning more about the
Conversion, we are sending you the following materials which describe the stock
offering.
PROSPECTUS: This document provides detailed information about the
operations of the Company and the Bank and the proposed stock offering.
QUESTIONS AND ANSWERS BROCHURE: Key questions and answers about the stock
offering are found in this brochure.
STOCK ORDER FORM AND CERTIFICATION FORM: This form is used to order stock
by returning it with your payment in the enclosed business reply envelope.
The deadline for ordering stock is Noon, Eastern Time, October X, 1997.
As a friend of the Bank, you will have the opportunity to buy stock
directly Staten Island Bancorp, Inc. in the Conversion without commission or
fee. If you have additional questions regarding the Conversion and stock
offering, please call us at (718) XXX-XXXX, Monday through Friday from 9:00 a.m.
to 5:00 p.m. or stop by the Stock Sales Center at 45 Beach Street, Staten
Island, New York.
We are pleased to offer you this opportunity to become a charter
shareholder of Staten Island Bancorp, Inc..
Sincerely,
Harry P. Doherty
Chairman and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE> 3
September XX, 1997
Dear Member:
We are pleased to announce that Staten Island Savings Bank, ( "Staten
Island Savings" or the "Bank") is converting from a federally-chartered mutual
savings bank to a federally-chartered stock savings bank (the "Conversion"). In
conjunction with the Conversion, Staten Island Bancorp, Inc., (the "Company")
the newly-formed corporation that will serve as holding company for the Bank, is
offering shares of common stock in a subscription offering and community
offering. The sale of stock in connection with the Conversion support and
enhance the Bank's current operations.
To accomplish the Conversion, we need your participation in an
important vote. Enclosed is a proxy statement describing the Plan of Conversion
and your voting and subscription rights. The Plan of Conversion has been
approved by the Office of Thrift Supervision and now must be approved by you.
YOUR VOTE IS VERY IMPORTANT.
Enclosed, as part of the proxy material, is your proxy card located
behind the window of your mailing envelope. This proxy should be signed and
returned to us prior to the Special Meeting scheduled for October XX, 1997.
Please take a moment to sign the enclosed proxy card and return it to us in the
postage-paid envelope provided. FAILURE TO VOTE HAS THE SAME EFFECT AS VOTING
AGAINST THE CONVERSION.
The Board of Directors of the Bank believes that the Conversion is in
the best interests of the Bank and its members, offering a number of advantages,
such as an opportunity for depositors and customers of the Bank to become
shareholders of the Company. Please remember:
- Your accounts at the Bank will continue to be insured up to the maximum
legal limit by the Federal Deposit Insurance Corporation ("FDIC").
- There will be no change in the balance, interest rate, or maturity of
any of your deposit accounts or loans because of the Conversion.
- You have the right, but no obligation, to buy stock before it is
offered to the public.
- Like all stock, stock issued by the Company will not be insured by the
FDIC.
Enclosed also are materials describing the stock offering. We urge you
to read these materials carefully. If you are interested in ordering the common
stock of the Company. you must submit your Stock Order Form and Certification
Form, and payment prior to Noon, Eastern Time, October XX, 1997.
If you have additional questions regarding the stock offering, please
call us at (718) XXX-XXXX, Monday through Friday from 9:00 a.m. to 5:00 p.m., or
stop by the Stock Sales Center located at 45 Beach Street in Staten Island, New
York.
Sincerely,
Harry P. Doherty
Chairman and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED IN THIS OFFERING ARE NOT SAVINGS
ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE BANK INSURANCE FUND OR THE SAVINGS ASSOCIATION INSURANCE FUND
OR ANY OTHER GOVERNMENT AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY STOCK. THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE> 4
September XX, 1997
Dear Member:
We are pleased to announce that Staten Island Savings Bank, ( "Staten
Island Savings" or the "Bank") is converting from a federally-chartered mutual
savings bank to a federally-chartered stock savings bank (the "Conversion"). In
conjunction with the Conversion, Staten Island Bancorp, Inc., (the "Company")
the newly-formed corporation that will serve as holding company for the Bank, is
offering shares of common stock in a subscription offering and community
offering. The sale of stock in connection with the Conversion support and
enhance the Bank's current operations.
Unfortunately, Staten Island Bancorp, Inc. is unable to either offer or
sell its common stock to you because the small number of eligible subscribers in
your jurisdiction makes registration or qualification of the common stock under
the securities laws of your jurisdiction impractical, for reasons of cost or
otherwise. Accordingly, this letter should not be considered an offer to sell or
a solicitation of an offer to buy the common stock of Staten Island Savings
Bank.
However, as a member of the Bank, you have the right to vote on the
Plan of Conversion at the Special Meeting of Members to be held on October XX,
1997. Therefore, enclosed is a Proxy Card, a Proxy Statement (which includes the
Notice of the Special Meeting), Prospectus (which contains information
incorporated into the Proxy Statement) and a return envelope for your proxy
card.
I invite you to attend the Special Meeting on October XX, 1997.
However, whether or not you are able to attend, please complete the enclosed
proxy card and return it in the enclosed envelope.
Sincerely,
Harry P. Doherty
Chairman and Chief Executive Officer
<PAGE> 5
September xx, 1997
Dear Prospective Investor:
We are pleased to announce that Staten Island Savings Bank, ( "Staten
Island Savings" or the "Bank") is converting from a federally-chartered mutual
savings bank to a federally-chartered stock savings bank (the "Conversion"). In
conjunction with the Conversion, Staten Island Bancorp, Inc., (the "Company")
the newly-formed corporation that will serve as holding company for the Bank, is
offering shares of common stock in a subscription offering and community
offering. The sale of stock in connection with the Conversion support and
enhance the Bank's current operations.
We have enclosed the following materials to help you learn more about
the Conversion. Please read and review the materials carefully.
PROSPECTUS: This document provides detailed information about the
operations of the Company and the Bank and the proposed stock
offering.
QUESTIONS AND ANSWERS BROCHURE: Key questions and answers about the
stock offering are found in this brochure.
STOCK ORDER FORM AND CERTIFICATION FORM: This form is used to order
stock by returning it with your payment in the enclosed business reply
envelope. The deadline for ordering stock is Noon, Eastern Time,
October xx, 1997.
We invite our loyal customers and local community members to take
advantage of the opportunity to become charter shareholders of Staten Island
Bancorp, Inc. Through this offering you have the opportunity to buy stock
directly from Staten Island Bancorp, Inc. without commission or fee. The Board
of Directors and management of the Bank fully support the stock offering.
If you have additional questions regarding the Conversion and stock
offering, please call us at (718) XXX-XXXX, Monday through Friday from 9:00 a.m.
to 5:00 p.m., or stop by the Stock Sales Center located at 45 Beach Street,
Staten Island, New York.
Sincerely,
Harry P. Doherty
Chairman and Chief Executive Officer
THE SHARES OF COMMON STOCK BEING OFFERED ARE NOT SAVINGS ACCOUNTS OR DEPOSITS
AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK
INSURANCE FUND, THE SAVINGS ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL
AGENCY. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK.
THE OFFER IS MADE ONLY BY THE PROSPECTUS.
<PAGE> 6
PROXY GRAM
We recently forwarded to you a proxy statement and related materials regarding a
proposal to convert Staten Island Savings Bank from a federally-chartered mutual
savings bank to a federally-chartered stock savings bank.
Your vote on our Plan of Conversion has not yet been received. FAILURE TO VOTE
HAS THE SAME EFFECT AS VOTING AGAINST THE CONVERSION.
Your vote is important to us, and we, therefore, are requesting that you sign
the enclosed proxy card and return it promptly in the enclosed postage-paid
envelope.
Voting for the Conversion does not obligate you to purchase stock or affect the
terms or insurance on your accounts.
The Board of Directors unanimously recommend you vote "FOR" the Conversion.
STATEN ISLAND SAVINGS BANK
Staten Island, New York
Harry P. Doherty
Chairman and Chief Executive Officer
If you mailed the proxy, please accept our thanks and disregard this request.
For further information call (718) XXX-XXXX.
- -----------------------------------------------------------------------------
The shares of common stock being offered are not savings accounts or deposits
and are not insured by the Federal Deposit Insurance Corporation, the Bank
Insurance Fund or any other governmental agency. This is not an offer to sell
or a solicitation of an offer to buy stock. The offer is made only by the
Prospectus.
<PAGE> 7
STATEN ISLAND BANCORP, INC.
the holding company for
STATEN ISLAND SAVINGS BANK
Become a Shareholder!
<PAGE> 8
CAPITAL REQUIREMENTS
As of April 30, 1997, Staten Island Savings Bank complied with all regulatory
capital requirements.
<TABLE>
<CAPTION>
Tangible Core Risk-Based
Capital Capital Capital
------- ------- -------
<S> <C> <C> <C>
Required 1.5% 3.0% 8.0%
4/30/97 8.4 9.5 19.6
Pro Forma* 14.8 15.8 33.0
</TABLE>
* Assumes the sale of 35,595,238 shares and retention of 50% of the net
conversion proceeds by the Company
RETURN ON AVERAGE ASSETS*
Staten Island Savings Bank's average return on average assets for the five years
ended December 31, 1996 was 1.10%. The Bank's return on average aseets for the
four months ended April 30, 1997 was 1.15%.
<TABLE>
<S> <C>
12/31/92 1.00%
12/31/93 1.21
12/31/94 1.17
12/31/95 0.88
12/31/96 1.24
12/31/97 1.15
</TABLE>
* Historical return on average assets may not be predicative of future returns.
LOAN PORTFOLIO COMPOSITION
Staten Island Savings Bank's primary emphasis has been, and continues to be, the
origination of loans secured by first liens on single-family residences located
primarily in Staten Island and, to a lesser extent, Brooklyn and other areas in
New York. In addition, the Bank's mortgage loan portfolio includes loans secured
by commercial real estate, construction and land loans, home equity loans and
loans secured by multi-family residential properties. The Bank also originates
various other loans including commercial business loans and consumer loans.
<TABLE>
<S> <C>
Single-family 75.90%
Commercial real estate 11.28
Construction and land 3.16
Home Equity 3.01
Multi-family 2.91
Other 3.75
</TABLE>
At April 30, 1997
<PAGE> 9
PRO FORMA DATA*
At or For the Four Months Ended April 30, 1997
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
MINIMUM MIDPOINT MAXIMUM 15% ABOVE
OF RANGE OF RANGE OF RANGE MAXIMUM OF RANGE
==========================================================================================================
<S> <C> <C> <C> <C>
Shares Outstanding 26,309,524 30,952,381 35,595,238 40,934,524
Sale Price Per Share $10.00 $10.00 $10.00 $10.00
Gross Proceeds $263,095,240 $309,523,810 $355,952,380 $409,345,240
Pro Forma
Stockholders' Equity $409,276,000 $450,733,000 $492,190,000 $539,865,000
Stockholders' Equity per Share $14.82 $13.87 $13.16 $12.55
Price/Book Ratio (a) 67.48% 72.10% 75.99% 79.68%
Earnings Per Common Share (b) $0.34 $0.30 $0.27 $0.24
Price/Earnings Ratio (a) 9.80x 11.11x 12.35x 13.89x
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Information based upon assumptions in the Prospectus dated September xx,
1997 under "Pro Forma Data".
(a) This is not intended to represent potential price appreciation. There are no
assurances that the market price will be at or above the offering price once
the shares are issued.
SELECTED FINANCIAL RATIOS
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
FOR THE FOUR
MONTHS ENDED
APRIL 30, 1997 AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1996 1995 1994 1993 1992
=======================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Return on average assets 1.15% 1.00% 1.21% 1.17% 88.00% 1.24%
Return on average equity 12.11% 14.00% 15.17% 13.27% 9.54% 14.03%
Interest rate spread 4.02% 3.48% 3.91% 3.64% 3.64% 3.84%
Tangible equity to assets at end of period 8.33% 7.34% 8.40% 9.55% 7.09% 8.22%
Nonperforming assets to total assets
at end of period 1.39% 0.48% 0.62% 0.61% 1.44% 1.34%
Allowance for loan losses to
total loans at end of period 1.48% 0.50% 0.62% 0.51% 1.32% 1.02%
- -------------------------------------------------------------------------------------------------------
</TABLE>
The shares of common stock offered in the Conversion are not savings accounts or
deposits and are not insured by the Federal Deposit Insurance Corporation, the
Bank Insurance Fund, the Savings Association Insurance Fund, or any other
government agency. This is not an offer to sell or a solicitation of an offer to
buy the stock. The offer is made only by the Prospectus.
<PAGE> 10
STATEN ISLAND BANCORP, INC.
STOCK SALES CENTER
45 Beach Street
Staten Island, New York 10304
(718) XXX-XXXX
<PAGE> 11
WILL THE STOCK BE INSURED?
- -------------------------------------------------------------------------------
No. Like any other stock, the Company's stock will not be insured.
WILL DIVIDENDS BE PAID ON THE STOCK?
- -------------------------------------------------------------------------------
The Company's Board of Directors intends to consider implementation of a policy
of declaring and paying quarterly cash dividends on the Common Stock. However,
there has been no determination made at this point in time as to the initial
rate of dividend, if any, to be paid on the Common Stock. No assurances can be
given, however, that dividends will in fact be paid on the Common Stock or that,
if paid, such dividends will not be reduced or eliminated in future periods.
HOW WILL THE STOCK BE TRADED?
- -------------------------------------------------------------------------------
The Company's stock will trade on the New York Stock Exchange under the
symbol " ". However, no assurance can be given that an active and liquid
market will develop.
ARE OFFICERS AND DIRECTORS OF THE BANK PLANNING TO PURCHASE STOCK?
- -------------------------------------------------------------------------------
Yes! The Bank's officers and directors plan to purchase, in the aggregate,
$5,000,000 million worth of stock or approximately 1.4% of the stock offered
at the maximum of the offering range.
MUST I PAY A COMMISSION?
- -------------------------------------------------------------------------------
No. You will not be charged a commission or fee on the purchase of shares in the
Conversion.
SHOULD I VOTE?
- -------------------------------------------------------------------------------
Yes. Your "YES" vote is very important!
PLEASE VOTE, SIGN AND RETURN ALL PROXY CARDS!
WHY DID I GET SEVERAL PROXY CARDS?
- -------------------------------------------------------------------------------
If you have more than one account, you could receive more than one proxy card,
depending on the ownership structure of your accounts.
HOW MANY VOTES DO I HAVE?
- -------------------------------------------------------------------------------
Your proxy card(s) show(s) the number of votes you have. Every depositor
entitled to vote may cast one vote for each $100, or fraction thereof, on
deposit as of the voting record date but no more than 1,000 votes. These voting
rights are established by the Bank's charter.
MAY I VOTE IN PERSON AT THE SPECIAL MEETING?
- -------------------------------------------------------------------------------
Yes, but we would still like you to sign and mail your proxy card, today. If you
decide to revoke your proxy you may do so by executing and delivering a
subsequently dated proxy card or by giving notice at the special meeting.
FOR ADDITIONAL INFORMATION YOU MAY CALL OUR STOCK SALES CENTER BETWEEN 9:00 A.M.
AND 5:00 P.M. MONDAY THROUGH FRIDAY.
-------------------------
STOCK SALES CENTER
(718) XXX-XXXX
-------------------------
Staten Island Bancorp, Inc.
45 Beach Street
Staten Island, New York 10304
Phone (718) xxx-xxxx
-------------------------
STOCK OFFERING
QUESTIONS &
ANSWERS
-------------------------
Staten Island
Bancorp, Inc.
THE SHARES OF STOCK ARE NOT SAVINGS ACCOUNTS OR DEPOSITS AND ARE NOT INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE BANK INSURANCE FUND, THE SAVINGS
ASSOCIATION INSURANCE FUND OR ANY OTHER GOVERNMENTAL AGENCY. THIS IS NOT AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY STOCK. THE OFFER IS MADE ONLY
BY THE PROSPECTUS.
<PAGE> 12
FACTS ABOUT CONVERSION
The Board of Directors of Staten Island Savings Bank ("Bank") unanimously
adopted a Plan of Conversion (the "Conversion") to convert from a federally-
chartered mutual savings bank to a federally-chartered stock savings bank.
This brochure answers some of the most frequently asked questions about the
Conversion and about your opportunity to invest in Staten Island Bancorp, Inc.,
(the "Company"), the newly formed corporation that will serve as the holding
company for the Bank, following the Conversion..
Investment in the stock of the Company involves certain risks. For a discussion
of these risks and other factors, investors are urged to read the accompanying
Prospectus, especially the discussion under the heading "Risk Factors".
WHY IS THE BANK CONVERTING TO STOCK FORM?
- -------------------------------------------------------------------------------
The stock form of ownership is used by most business corporations and an
increasing number of savings institutions. Through the sale of stock, the
Company will raise additional capital to enable the Bank to:
- - support and expand its current financial and other services.
- - allow customers and friends the opportunity to purchase stock and share in
the Company's and the Bank's future.
WILL THE CONVERSION AFFECT ANY OF MY DEPOSIT ACCOUNTS OR LOANS?
- -------------------------------------------------------------------------------
No. The Conversion will have no effect on the balance or terms of any savings
account or loan, and your deposits will continue to be federally insured by the
Federal Deposit Insurance Corporation ("FDIC") to the maximum legal limit. YOUR
SAVINGS ACCOUNT IS NOT BEING CONVERTED TO STOCK.
WHO IS ELIGIBLE TO PURCHASE STOCK IN THE SUBSCRIPTION AND COMMUNITY OFFERINGS?
- -------------------------------------------------------------------------------
Certain past and present depositors of the Bank, the Bank's Employee Stock
Ownership Plan and members of the general public.
HOW MANY SHARES OF STOCK ARE BEING OFFERED AND AT WHAT PRICE?
- -------------------------------------------------------------------------------
The Company is offering up to 35,595,238 shares of Common Stock, subject to
adjustment as described in the Prospectus, at a price of $10.00 per share
through the Prospectus.
HOW MUCH STOCK MAY I BUY?
- -------------------------------------------------------------------------------
The minimum order is 25 shares. No person alone may purchase more than 30,000
shares of the Common Stock issued in the Conversion. No person, together with
associates and persons acting in concert with such person, may purchase in the
aggregate more than 1.0% of the Common Stock sold in the Conversion.
DO MEMBERS HAVE TO BUY STOCK?
- -------------------------------------------------------------------------------
No. However, the Conversion will allow the Bank's depositors an opportunity
to buy stock and become charter shareholders of the Company for the local
financial institution with which they do business.
HOW DO I ORDER STOCK?
- -------------------------------------------------------------------------------
You must complete the enclosed Stock Order Form/Certification Form. Instructions
for completing your Stock Order Form/ Certification Form are contained in this
packet. Your order must be received by Noon, Eastern Time, on October xx, 1997.
HOW MAY I PAY FOR MY SHARES OF STOCK?
- -------------------------------------------------------------------------------
First, you may pay for stock by check, cash or money order. Interest will be
paid by the Bank on these funds at the passbook rate, which is currently 2.85%,
from the day the funds are received until the completion or termination of the
Conversion. Second, you may authorize us to withdraw funds from your savings
account or certificate of deposit at the Bank for the amount of funds you
specify for payment. You will not have access to these funds from the day we
receive your order until completion or termination of the Conversion.
CAN I PURCHASE SHARES USING FUNDS IN MY SAVINGS BANK IRA ACCOUNT?
- -------------------------------------------------------------------------------
Federal regulations do not permit the purchase of conversion stock from your
existing Bank IRA account. To accommodate our depositors, however, we have made
arrangements with an outside trustee to allow such purchases. Please call our
Stock Sales Center for additional information.
