<PAGE> 1
As filed with the Securities and Exchange Commission on November 14, 1997
Registration No.333-32113 AND
Registration No.333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
REGISTRATION STATEMENT
ON FORM S-1 AND
POST-EFFECTIVE AMENDMENT NO. 2 TO THE
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
STATEN ISLAND BANCORP, INC.
(Exact name of registrant as specified in its articles of incorporation)
----------------
<TABLE>
<S> <C> <C>
Delaware 6711 13-3958850
- ---------------------------- -------------- ------------------
(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
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 ]
<TABLE>
<CAPTION>
==================================================================================================================================
AMOUNT
TITLE OF EACH CLASS OF TO BE PURCHASE PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value per
share (1) 45,130,313 shares(2) $12.00 $541,563,756(3) $164,110.23(2)
- ----------------------------------------------------------------------------------------------------------------------------------
Participation interests 1,518,689 shares -- -- (4)
==================================================================================================================================
</TABLE>
(1) Includes shares of Common Stock to be issued to the SISB Community
Foundation, a private foundation.
(2) Includes 42,981,250 shares of Common Stock previously registered on Form S-1
by Registration Statement No. 333-32113, which registration is being
carried forward pursuant to Rule 429 under the Securities Act of 1933. The
Prospectus included herein is a combined prospectus and also relates to
42,981,250 shares of Common Stock registered pursuant to Registration
Statement No. 333-32113 previously filed by the Registrant and declared
effective on September 11, 1997. This Registration Statement also
constitutes a post-effective amendment to Registration Statement No.
333-32113. The Registrant has previously paid an aggregate registration
fee in the amount of $164,110.23, $130,246.22 of which was paid with
respect to File No. 333-32113.
(3) Estimated solely for the purpose of calculating the registration fee.
(4) 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.
===============================================================================
<PAGE> 2
PROSPECTUS SUPPLEMENT
STATEN ISLAND BANCORP, INC.
(Proposed Holding Company for Staten Island Savings Bank)
37,375,000 Shares of Common Stock
(Which Amount May Be Increased to 42,981,250 Shares)
$12.00 per Share
On November 6, 1997, RP Financial, L.C. ("RP Financial") updated its
appraisal of the estimated pro forma market value of the common stock, par
value $.01 per share ("Common Stock"), of Staten Island Bancorp, Inc. (the
"Company") which will be sold in connection with the conversion of Staten
Island Savings Bank from a federally-chartered mutual savings bank to a
federally-chartered stock savings bank ("Staten Island Savings" or the "Bank")
pursuant to the Bank's plan of conversion (the "Plan" or "Plan of Conversion").
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." Based upon the Bank's
results of operation for the quarter and nine months ended September 30, 1997,
increases in the market prices for publicly traded securities of comparable
institutions and market demand for the Common Stock, as reflected by the level
of subscriptions received, RP Financial concluded that the estimated pro forma
market value of the shares of Common Stock to be issued by the Company in
connection with the Conversion has increased to a range of $331.5 million to
$448.5 million (the "Amended Valuation Range"), as compared to the range of
$283.3 million to $383.3 million established by the appraisal of RP Financial
dated July 17, 1997, as updated on September 5, 1997, which constitutes a 17%
increase in the range. The appraisal process was described in the Company's
prospectus ("Prospectus") dated September 12, 1997. See "The Conversion -
Stock Pricing and Number of Shares to be Issued" in the Prospectus.
As a result of the increase in the pro forma market value of the Common
Stock as reflected in the November 6, 1997 appraisal update, the Company and
the Bank have received permission from the Office of Thrift Supervision ("OTS")
to increase the purchase price from $10.00 per share to $12.00 per share (the
"Amended Purchase Price"). Based on the Amended Valuation Range and the
Amended Purchase Price, the number of shares of Common Stock being offered for
sale in the Conversion ranges from 27,625,000 to 37,375,000 shares (which
amount may be increased to 42,981,250 shares without a further resolicitation
of subscribers). For further information as to the effects of the change in
the estimate of the pro forma market value of the Common Stock, see "Use of
Proceeds," "Capitalization," "Pro Forma Data" and "Amended Valuation Range"
herein.
In view of the November 6, 1997 appraisal update, all persons who
subscribed for shares of Common Stock pursuant to the Subscription Offering are
being offered the opportunity to (i) rescind their subscription order, which
will result in a return of all of their funds submitted, plus interest earned,
or a cancellation of their withdrawal authorizations; (ii) continue their order
for the same dollar amount of Common Stock originally subscribed for, which
will result in fewer shares being received due to the increase in the Amended
Purchase Price and a refund in lieu of fractional shares, if any; (iii)
decrease the total dollar amount of their subscription order, which, after
taking into consideration the number of desired shares at the Amended Purchase
Price, will result in an adjustment of the withdrawal authorization or a refund
of the overpayment, plus interest earned; or (iv)
<PAGE> 3
subject to applicable purchase limitations, increase the total dollar amount of
their subscription, which, due to the Amended Purchase Price, will require the
submission of additional funds or an increase in the withdrawal authorization.
IN ORDER TO CONFIRM YOUR ORDER FOR SHARES OF COMMON STOCK, YOU MUST COMPLETE
AND RETURN THE ENCLOSED SUPPLEMENTAL ORDER FORM TO THE BANK, ACCOMPANIED, IF
APPLICABLE, BY PAYMENT OR A WITHDRAWAL AUTHORIZATION, SO THAT IT IS RECEIVED NO
LATER THAN 12:00 NOON, EASTERN TIME, ON DECEMBER ___, 1997. FAILURE TO RETURN
A SUPPLEMENTAL ORDER FORM WILL RESULT IN YOUR ORDER BEING RESCINDED, A RETURN
OF ALL OF YOUR FUNDS SUBMITTED, PLUS INTEREST EARNED, OR A CANCELLATION OF YOUR
WITHDRAWAL AUTHORIZATION.
With the exception of the Company's Employee Stock Ownership Plan ("ESOP"),
the maximum amount that any person may purchase in any particular priority
category in the Offerings is generally limited to one-tenth of one percent
(0.10%) of the shares of Common Stock sold in the Conversion. Assuming the sale
of 42,981,250 shares, which is the maximum, as adjusted, of the Amended
Valuation Range, the maximum amount of Common Stock that any person may
subscribe for generally in any category is 42,981 shares or $515,772. 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 otherwise be unavailable until such time. See
"Limitation on Common Stock purchases" in this Prospectus Supplement.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY EACH
PROSPECTIVE INVESTOR, SEE "RISK FACTORS" IN THE PROSPECTUS AND "ADDITIONAL RISK
FACTORS" IN THIS PROSPECTUS SUPPLEMENT.
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 SECURITIES COMMISSION, NOR HAS
SUCH COMMISSION, OFFICE OR OTHER AGENCY OR COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
==================================================================================================
Estimated
Amended Underwriting Estimated
Purchase Fees and Other Net
Price(1) Expenses(2) Proceeds(3)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum Per Share . . . . . . . . . . . . $12.00 $0.25 $11.75
- --------------------------------------------------------------------------------------------------
Midpoint Per Share . . . . . . . . . . . $12.00 $0.23 $11.77
- --------------------------------------------------------------------------------------------------
Maximum Per Share . . . . . . . . . . . . $12.00 $0.22 $11.78
- --------------------------------------------------------------------------------------------------
Maximum Per Share, as adjusted(4) . . . . $12.00 $0.21 $11.79
- --------------------------------------------------------------------------------------------------
Total Minimum(1) . . . . . . . . . . . . $331,500,000 $6,932,000 $324,568,000
- --------------------------------------------------------------------------------------------------
Total Midpoint(1) . . . . . . . . . . . . $390,000,000 $7,551,000 $382,449,000
- --------------------------------------------------------------------------------------------------
Total Maximum(1) $448,500,000 $8,170,000 $440,330,000
- --------------------------------------------------------------------------------------------------
Total Maximum, as adjusted(4) . . . . . . $515,775,000 $8,882,000 $506,893,000
==================================================================================================
</TABLE>
(1) Determined in accordance with the Amended Valuation Range established by RP
Financial and the Amended Purchase Price, which has been approved by the
Board of Directors of the Company and the Bank.
<PAGE> 4
(2) Consists of the estimated costs to the Company and the Bank arising from
the Conversion, including estimated fixed expenses of $3,500,000 and fees
to be paid to Keefe, Bruyette & Woods, Inc. ("Keefe, Bruyette") in
connection with the Offerings, which fees are estimated to be $3,432,000,
$4,051,000 $4,670,000 and $5,382,000 at the minimum, midpoint, maximum and
maximum, as adjusted, of the Amended Valuation Range, respectively. 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" in the
Prospectus. The actual fees and expenses may vary from the estimates. See
"Pro Forma Data" herein.
(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"
herein.
(4) Gives effect to an increase in the number of shares of Common Stock which
may be sold in the Conversion at the Amended Purchase Price, without
resolicitation of subscribers or any right of cancellation, due to a 15%
increase in the Amended Valuation Range (42,981,250 shares). See "The
Conversion - Stock Pricing and Number of Shares to be Issued" in the
Prospectus and "Pro Forma Data" herein.
FOR INFORMATION, CALL THE STOCK SALES CENTER AT (718) 815-7171
------------------------------
THIS PROSPECTUS SUPPLEMENT SUPPLEMENTS AND AMENDS THE PROSPECTUS OF THE
COMPANY, DATED SEPTEMBER 12, 1997, WHICH IS INCORPORATED HEREIN BY REFERENCE
AND SHOULD BE READ IN CONJUNCTION HEREWITH. ANY INFORMATION PRESENTED HEREIN
SUPERSEDES THAT CONTAINED IN THE PROSPECTUS. UNLESS OTHERWISE SPECIFICALLY SET
FORTH HEREIN, CAPITALIZED TERMS USED, BUT NOT DEFINED, IN THIS PROSPECTUS
SUPPLEMENT SHALL HAVE THE SAME MEANING AS THEY DO IN THE PROSPECTUS. SEE
"EXTENSION OF TIME PERIOD TO COMPLETE THE CONVERSION" FOR INFORMATION ON HOW A
SUBSCRIBER MAY OBTAIN AN ADDITIONAL COPY OF THE PROSPECTUS. 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.
-----------------------------------
KEEFE, BRUYETTE & WOODS, INC.
-----------------------------------
The date of this Prospectus Supplement is November __, 1997
<PAGE> 5
RESULTS OF THE SPECIAL MEETING OF MEMBERS AND
THE SUBSCRIPTION OFFERING
At the Special Meeting of Members of the Bank held on October 28, 1997,
7,526,403 votes, or 50.92% of the 14,779,735 total votes eligible to be cast,
were voted in favor of the Bank's Plan of Conversion, and 7,398,736 votes, or
50.06%, were voted in favor of the establishment of the SISB Community
Foundation (the "Foundation") and the proposed contribution of Common Stock to
the Foundation in conjunction with the consummation of the Conversion.
Accordingly, each of the Plan of Conversion and the creation of, and
contribution to, the Foundation were approved by more than the required
majority of the total votes entitled to be cast at the Special Meeting.
The Bank originally offered 38,333,000 shares of Common Stock in the
Subscription Offering. The Bank received orders to purchase 81,702,824 shares
of Common Stock (including the ESOP), or 185.3% of the shares initially
offered, from eligible depositors of the Bank and directors, officers and
employees of the Bank. Eligible Account Holders subscribed for approximately
74.2 million shares. See "The Conversion - Subscription Offering and
Subscription Rights."
AMENDED VALUATION RANGE
As required by applicable regulations, upon conclusion of the initial
Subscription Offering, RP Financial submitted an updated appraisal of the pro
forma market value of the Common Stock to the Bank and the OTS. The updated
appraisal of RP Financial dated November 6, 1997 set forth an estimated Amended
Valuation Range of the Common Stock to be sold in the Conversion of $331.5
million at the minimum and $448.5 million at the maximum, with a midpoint of
$390.0 million, which constitutes a 17.0% increase from the midpoint valuation
established by the appraisal report dated July 17, 1997, as updated on
September 5, 1997, which was set forth in the Prospectus. The increased
valuation set forth in RP Financial's updated appraisal was based on the Bank's
results of operations for the quarter and nine months ended September 30, 1997,
increases in market prices for publicly traded securities of comparable
institutions and market demand for the Common Stock, as reflected by the level
of subscriptions received. In determining the reasonableness and adequacy of
RP Financial's updated appraisal, the Board of Trustees reviewed the
methodology and the appropriateness of the assumptions used by RP Financial.
Copies of RP Financial's appraisal report and updated appraisals are available
for inspection at the main office of the Bank and are otherwise publicly
available. See "Additional Information."
As a result of the increase in the pro forma market value of the Common
Stock as reflected in the updated appraisal, the Company and the Bank have
received permission from the OTS to increase the purchase price from $10.00 per
share to the Amended Purchase Price of $12.00 per share. Based on the Amended
Valuation Range and the Amended Purchase Price, the number of shares being
offered in the Conversion ranges from 27,625,000 shares to 37,375,000 shares.
In the event the Company receives orders for Common Stock in excess of $448.5
million (the maximum of the Amended Valuation
<PAGE> 6
Range), the final valuation may be increased by RP Financial to a maximum of
$515,775 million (the maximum of the Amended Valuation Range, as adjusted by
15%) and the Company may accept orders for up to 42,981,250 shares of Common
Stock without an additional resolicitation of subscribers or any right of
cancellation.
Subscribers should note that the change in the estimated pro forma market
value has a material impact on the pro forma data presented in this Prospectus
Supplement when compared to the values presented in the Prospectus. At the
maximum of the Amended Valuation Range, pro forma per share net income and
stockholders' equity per share at or for the nine months ended September 30,
1997 would be $0.63 and $15.10, respectively, while the price per share to pro
forma net income per share would be 14.29x and the ratio of price per share to
pro forma stockholders' equity per share and pro forma tangible stockholders'
equity per share would be 79.47% and 82.08%, respectively. Assuming 42,981,250
shares of Common Stock are sold in the Conversion, based upon the maximum, as
adjusted, of the Amended Valuation Range, the price per share to pro forma net
income per share would be 15.79x and the ratio of price per share to pro forma
stockholders' equity per share and pro forma tangible stockholders' equity per
share would be 82.99% and 85.47%, respectively. These amounts may be compared
to pro forma per share net income and stockholders' equity at or for the four
months ended April 30, 1997 of $0.25 and $12.83, respectively, at the maximum
of the previous Estimated Valuation Range, and the ratio of price per share to
pro forma net income per share of 13.33x and the price per share to pro forma
stockholders' equity per share and pro forma tangible stockholders' equity per
share of 77.94% and 81.04%, respectively, at such previous maximum. The number
of shares ultimately sold in the Conversion within the Amended Valuation Range
will depend upon market demand for the Common Stock as well as market and
financial conditions following the conclusion of the resolicitation period, and
will affect the price to book value ratio, price to earnings ratio,
stockholders' equity per share and net income per share of the Common Stock.
Prospective investors should be aware that the increased valuation reflected in
the Amended Valuation Range may result in less favorable after-market price
performance of the Common Stock than might have occurred if the Estimated
Valuation Range had not been increased. See "Capitalization" and "Pro Forma
Data" herein for the effect on the pro forma stockholders' equity, stockholders'
equity per share, net income, net income per share, price to book value ratios
and price to earnings ratios resulting from the Amended Valuation Range.
In view of the appraisal update, all persons who subscribed for shares of
Common Stock in the Subscription Offering are being offered the opportunity to
(i) rescind their subscription, which will result in a return of all of their
funds submitted, plus interest earned, or a cancellation of their withdrawal
authorizations; (ii) continue their order for the same dollar amount of Common
Stock originally subscribed for, which will result in fewer shares being
received due to the increase in the Amended Purchase Price and a refund in lieu
of fractional shares, if any; (iii) decrease the total dollar amount of their
subscription, which will result in an adjustment of the withdrawal
authorization or a refund of the overpayment, plus interest earned; or (iv)
subject to applicable purchase limitations, increase the total dollar amount of
their subscription, which will require the submission of additional funds or an
increase in the withdrawal authorization. IN ORDER TO CONFIRM YOUR
2
<PAGE> 7
ORDER FOR SHARES OF COMMON STOCK, YOU MUST COMPLETE AND RETURN THE ENCLOSED
SUPPLEMENTAL ORDER FORM TO THE BANK, ACCOMPANIED, IF APPLICABLE, BY PAYMENT OR
A WITHDRAWAL AUTHORIZATION, SO THAT IT IS RECEIVED NO LATER THAN 12:00 NOON,
EASTERN TIME, ON DECEMBER ___, 1997. FAILURE TO RETURN A SUPPLEMENTAL ORDER
FORM WILL RESULT IN YOUR ORDER BEING RESCINDED, A RETURN OF ALL OF YOUR FUNDS
SUBMITTED, PLUS INTEREST EARNED, OR A CANCELLATION OF YOUR WITHDRAWAL
AUTHORIZATION. As a result of this resolicitation offer, the number of shares
of Common Stock set forth under "Results of the Special Meeting of Members and
the Subscription Offering" which were subscribed for in the Subscription
Offering may change.
ADDITIONAL RISK FACTORS
Prospective investors should consider carefully the matters presented below
and in the "Risk Factors" section of the Prospectus in addition to the other
information contained herein and in the Prospectus.
POSSIBLE ADVERSE EFFECT ON AFTER-MARKET PRICE PERFORMANCE
Prospective investors should be aware that the increased valuation
reflected in the Amended Valuation Range may result in less favorable
after-market price performance of the Common Stock than might have occurred if
the Estimated Valuation Range of the Common Stock had not been increased.
BASIS OF UPDATED APPRAISAL
The updated appraisal of RP Financial is based upon the Bank's results of
operations for the quarter and nine months ended September 30, 1997, increases
in the market prices for publicly traded securities of comparable institutions,
increased demand for initial public offerings of financial service companies
and strong after market performance for the common stock of such companies,
market demand as reflected by the level of subscriptions received as well as
current conditions in the market for thrift institution common stocks. Among
other factors, acquisition activity both in New York and in other comparable
market areas has generally resulted in higher bank and thrift stock prices as
investors speculate that industry consolidation will continue. No assurance
can be given that such speculative activity will continue.
EXTENSION OF TIME PERIOD TO COMPLETE THE CONVERSION
OTS regulations provide that the sale of the Common Stock must be completed
within 45 days following the termination of the subscription period, unless
such period is extended by the OTS. As a result of the need to resolicit all
persons who previously subscribed for shares of Common Stock in the
Subscription Offering, the resolicitation will terminate at
3
<PAGE> 8
12:00 noon, Eastern Time on December __, 1997 unless extended by the Bank and
the Company, with approval of the OTS, if necessary. Any Community Offering or
Syndicated Community Offering must be completed within 45 days after the close
of the resolicitation period, unless extended by the Bank and the Company with
the approval of the OTS, if necessary. As a result of the increase in the
Estimated Valuation Range, all subscribers have been given the right to
continue their order for the dollar amount of shares subscribed for, or to
increase, decrease or rescind their subscriptions. See "Amended Valuation
Range." If the Subscription and Community Offerings are not completed by
________ __, 1998, either all funds received will be returned with interest and
withdrawal authorizations cancelled or, if the OTS has granted an extension of
such period, all subscribers will again be given the right to continue their
order for the dollar amount of shares subscribed for, or to increase, decrease
or rescind their subscriptions at any time prior to 20 days before the end of
the extension period. ANY SUBSCRIBER WHO REQUIRES AN ADDITIONAL COPY OF THE
PROSPECTUS PREVIOUSLY PROVIDED BY THE COMPANY MAY OBTAIN ONE BY CONTACTING THE
STOCK SALES CENTER AT (718) 815-7171. THE COMPANY WILL PROMPTLY PROCESS SUCH A
REQUEST. SINCE THE RESOLICITATION PERIOD ENDS ON DECEMBER ___, 1997, ANY
SUBSCRIBER WHO DESIRES TO OBTAIN A COPY OF THE PROSPECTUS SHOULD REQUEST ONE
PROMPTLY.
SUBSCRIPTION BY THE ESOP
The Plan of Conversion provides that the ESOP may subscribe for up to 8% of
the Common Stock to be issued in the Conversion. Based on the Amended
Valuation Range, the ESOP intends to purchase in the Conversion an amount of
Common Stock equal to 8% of the total number of shares of Common Stock issued
in the Conversion, or 2,210,000 shares and 2,990,000 shares of Common Stock at
the minimum and maximum of the Amended Valuation Range, respectively (3,438,500
shares at the maximum, as adjusted).
LIMITATION ON COMMON STOCK PURCHASES
As a result of the Amended Valuation Range, each Eligible Account Holder,
Supplemental Eligible Account Holder and Other Member generally may subscribe
for one-tenth of one percent (0.10%) of total shares of Common Stock sold in
the Conversion (42,981 shares or $515,772 assuming 42,981,250 shares of Common
Stock are sold in the Conversion based on the maximum, as adjusted, of the
Amended Valuation Range), except for certain subscribers whose subscription
rights are based on the amount of the deposits at the Bank. In the event that
the number of shares sold in the Conversion is less than 42,981,250, orders for
the maximum number of shares will be reduced to the number of shares equal to
one-tenth of one percent (0.10%) of the number of shares sold and subject to
the allocation procedures of the Plan in the event of oversubscription. See
"The Conversion - Limitations on Common Stock Purchases" in the Prospectus.
Except for the ESOP and 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 sold in the
Conversion. In light of the level of subscriptions by Eligible Account Holders,
4
<PAGE> 9
no assurance can be given that shares of Common Stock will be available for
allocation to other subscribers.
All purchases will be subject to the maximum and minimum purchase
limitations and to certain other terms and conditions described in the
Prospectus. The minimum purchase is 25 shares or $300. Any person who
previously subscribed for 25 shares will be required to pay the difference in
order to maintain their order. Alternatively, as an example, any person who
subscribed for $1,200 or 120 shares of Common Stock would now receive 100
shares of Common Stock for the same $1,200. Subscribers who have paid or pay
for additional shares of Common Stock by cash, check, bank draft or money order
will earn interest at the Bank's stated rate on passbook accounts from the date
of receipt until the Conversion is completed or terminated.
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 $324.6
million and $440.3 million ($506.9 million assuming an increase in the Amended
Valuation Range by 15%). See "Pro Forma Data" herein as to the assumptions
used to arrive at such amounts.
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 sold in the
Conversion. Based upon the issuance of 27,625,000 shares or 37,375,000 shares
at the minimum and maximum of the Amended Valuation Range, respectively, the
loan to the ESOP would be $26.5 million and $35.9 million, respectively. 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 (the Company and the Bank have committed that no return of capital will
be made on the Common Stock during the one-year period subsequent to
consummation of the Conversion). 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
5
<PAGE> 10
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
September 30, 1997, the initial balance of the liquidation account would be
approximately $195.3 million. See "Dividend Policy," "The Conversion -
Liquidation Rights" and "The Conversion - Certain Restrictions on Purchase or
Transfer of Shares After the Conversion" in the Prospectus.
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 "Regulation - Regulation of Savings and
Loan Holding Companies" in the Prospectus 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 13.85% (based upon the midpoint of the
Amended Valuation Range). As a result, the Bank will continue to be a
well-capitalized institution. After the Conversion, the Bank intends to
emphasize growth in assets and earnings and capital strength.
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.
6
<PAGE> 11
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 received approval 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 Amended 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.
7
<PAGE> 12
CAPITALIZATION
The following table presents the historical capitalization of the Bank at
September 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 $12.00 Per Share
---------------------------------------------------------------------------
42,981,250
The Bank- 27,625,000 32,500,000 37,375,000 Shares(1)
Historical Shares (Minimum of Shares (Midpoint Shares (Maximum (15% above
Capitalization Range) of Range) of Range) Maximum of Range)
-------------- ------------------ ---------------- --------------- -----------------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Deposits(2) . . . . . . . . . . . . . $1,666,492 $1,666,492 $1,666,492 $1,666,492 $1,666,492
Borrowings . . . . . . . . . . . . . 245,841 245,841 245,841 245,841 245,841
--------- --------- --------- --------- ---------
Total deposits and borrowings . . . . $1,912,333 $1,912,333 $1,912,333 $1,912,333 $1,912,333
========= ========= ========= ========= =========
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) . . . . . . . . . . -- 290 341 392 451
Additional paid-in capital . . . . -- 324,278 382,108 439,938 506,442
Shares issued to Foundation(4) . . -- 16,575 19,500 22,425 25,789
Retained earnings(5) . . . . . . . 183,947 183,947 183,947 183,947 183,947
Net unrealized gain on marketable
securities . . . . . . . . . . . 11,336 11,336 11,336 11,336 11,336
Less:
Expense of contribution to
Foundation, net(6) . . . . . . . -- (8,785) (10,335) (11,885) (13,668)
Common Stock to be acquired by
the ESOP(7) . . . . . . . . . . . -- (26,520) (31,200) (35,880) (41,262)
Common Stock to be acquired by
the Recognition Plan(8) . . . . . -- (13,260) (15,600) (17,940) (20,631)
------- ------- ------- ------- -------
Total stockholders' equity . . . . . $195,283 $487,861 $540,097 $592,333 $652,404
======= ======= ======= ======= =======
</TABLE>
(Footnotes on following page)
8
<PAGE> 13
- --------------------------------
(1) As adjusted to give effect to an increase in the number of shares
which could occur due to an increase in the Amended Valuation Range of
up to 15%.
(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" herein and "Management - Benefits - Stock Option Plan" in
the Prospectus. 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 $12.00 per share.
(5) 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 the Prospectus. 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" in the Prospectus.
(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."
(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 Amended 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."
9
<PAGE> 14
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 $324.6 million and $440.3 million (or $506.9
million in the event the Amended 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 Keefe, Bruyette on
shares purchased by (x) the ESOP and any other employee benefit plan of the
Company or the 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 Amended 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 $6.9 million and $8.2 million (or
$8.9 million in the event the Amended 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 nine months ended September 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 5.44% and 5.49%, respectively, which represents the yield on
one-year U.S. Government securities at September 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 Common Stock has not been reflected. A
marginal tax rate of 47% has been assumed for the period, resulting in an
after-tax yield of 2.88% (annualized) and 2.91%, respectively, for the nine
months ended September 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 -
Benefits - Stock Option Plan" in the Prospectus. 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
10
<PAGE> 15
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 Common Stock sold 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.
11
<PAGE> 16
<TABLE>
<CAPTION>
At or For the Nine Months Ended September 30, 1997
-----------------------------------------------------------
27,625,000 32,500,000 37,375,000 42,981,250
Shares Sold Shares Sold Shares Sold Shares Sold
at $12.00 at $12.00 at $12.00 at $12.00
Per Share Per Share Per Share Per 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 . . . . . . . . . . . . . . . . . $331,500 $390,000 $448,500 $515,775
Plus: Shares acquired by Foundation (equal to
5% of the shares issued in the Conversion) . . 16,575 19,500 22,425 25,789
-------- -------- -------- --------
Pro forma market capitalization . . . . . . . . $348,075 $409,500 $470,925 $541,564
======== ======== ======== ========
Gross proceeds . . . . . . . . . . . . . . . . . $331,500 $390,000 $448,500 $515,775
Less offering expenses and commissions . . . . . 6,932 7,551 8,170 8,882
-------- -------- -------- --------
Estimated net proceeds . . . . . . . . . . . . 324,568 382,449 440,330 506,893
Less: Shares purchased by the ESOP . . . . . . . (26,520) (31,200) (35,880) (41,262)
Shares purchased by the
Recognition Plan . . . . . . . . . . . . (13,260) (15,600) (17,940) (20,631)
-------- -------- -------- --------
Total estimated net proceeds, as adjusted(1) . . $284,788 $335,649 $386,510 $445,000
======== ======== ======== ========
Net income (2):
Historical . . . . . . . . . . . . . . . . . . $16,997 $ 16,997 $ 16,997 $ 16,997
Pro forma income on net proceeds, as
adjusted . . . . . . . . . . . . . . . . . . 6,158 7,258 8,358 9,623
Pro forma ESOP adjustment(3) . . . . . . . . . (703) (827) (951) (1,093)
Pro forma Recognition Plan
adjustment(4) . . . . . . . . . . . . . . . . (1,054) (1,240) (1,426) (1,640)
-------- -------- -------- --------
Pro forma net income . . . . . . . . . . . . . $ 21,398 $ 22,188 $ 22,978 $ 23,887
======== ======== ======== ========
Net income per share(2)(5):
Historical . . . . . . . . . . . . . . . . . . $ 0.63 $ 0.54 $ 0.47 $ 0.41
Pro forma income on net proceeds, as
adjusted . . . . . . . . . . . . . . . . . . 0.23 0.23 0.23 0.23
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) . . . . . $ 0.79 $ 0.70 $ 0.63 $ 0.57
======== ======== ======== ========
Offering price to pro forma net
income per share (5) . . . . . . . . . . . . . 11.39x 12.86x 14.29x 15.79x
======== ======== ======== ========
Stockholders' equity:
Historical . . . . . . . . . . . . . . . . . . $195,283 $195,283 $195,283 $195,283
Estimated net proceeds . . . . . . . . . . . . 324,568 382,449 440,330 506,893
Plus: Shares issued to Foundation . . . . . . . 16,575 19,500 22,425 25,789
Less: Contribution to Foundation . . . . . . . (16,575) (19,500) (22,425) (25,789)
Plus: Tax benefit of the contribution
to Foundation . . . . . . . . . . . . . 7,790 9,165 10,540 12,121
Less: Common Stock acquired
by the ESOP(3) . . . . . . . . . . . . (26,520) (31,200) (35,880) (41,262)
Common Stock to be acquired by
the Recognition Plan(4) . . . . . . . . (13,260) (15,600) (17,940) (20,631)
-------- -------- -------- --------
Pro forma stockholders' equity(4)(6)(7) . . . . $487,861 $540,097 $592,333 $652,404
======== ======== ======== ========
Stockholders' equity per share(5):
Historical . . . . . . . . . . . . . . . . . . $ 6.73 $ 5.72 $ 4.98 $ 4.33
Estimated net proceeds . . . . . . . . . . . . 11.19 11.21 11.22 11.23
Plus: Shares issued to Foundation . . . . . . . 0.57 0.57 0.57 0.57
Less: Contribution to Foundation . . . . . . . (0.57) (0.57) (0.57) (0.57)
Plus: Tax benefit of contribution to
Foundation . . . . . . . . . . . . 0.27 0.27 0.27 0.27
Less: Common Stock acquired
by the ESOP(3) . . . . . . . . . . . . (0.91) (0.91) (0.91) (0.91)
Common Stock to be acquired by
the Recognition Plan(4) . . . . . . . . (0.46) (0.46) (0.46) (0.46)
-------- -------- -------- --------
Pro forma stockholders' equity
per share(4)(6)(7) . . . . . . . . . . . . . $ 16.82 $ 15.83 $ 15.10 $ 14.46
======== ======== ======== ========
Offering price as a percentage of pro
forma stockholders' equity per share(5) . . . . 71.34% 75.81% 79.47% 82.99%
======== ======== ======== ========
Offering price as a percentage of pro forma
tangible stockholders' equity per share(5) . . 74.21% 78.53% 82.08% 85.47%
======== ======== ======== ========
</TABLE>
(Footnotes on following page)
12
<PAGE> 17
- --------------------------------
(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 $12.00 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 $8.9 million,
$10.3 million, $11.9 million and $13.7 million at the minimum,
midpoint, maximum and maximum, as adjusted, of the Amended Valuation
Range, respectively. Assuming the contribution to the Foundation was
expensed during the nine months ended September 30, 1997, pro forma
net earnings per share would be $0.47, $0.37, $0.30 and $0.24, at the
minimum, midpoint, maximum and maximum as adjusted, respectively. Per
share net income data is based on 29,906,750, 31,655,000, 36,403,250
and 41,863,738 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 $12.00 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 -Benefits - Employee Stock Ownership Plan" in
the Prospectus.
(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 Amended Purchase Price and
that 15.0%, of the amount contributed, net of taxes, was an amortized
expense during the nine months ended September 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 sold 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 nine months ended September 30, 1997 would
be $0.77, $0.68, $0.62 and $0.56, at the minimum, midpoint, maximum
and 15% above the maximum of the Amended Valuation Range,
respectively, and pro forma stockholders' equity per share at
September 30, 1997 would be $16.64, $15.69, $14.98 and $14.37 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 Amended Purchase Price. See "Management - Benefits -
Recognition Plan" in the Prospectus.
(footnotes continued on following page)
13
<PAGE> 18
(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 2,099,500 shares, 2,470,000
shares, 2,840,500 shares, and 3,266,575 shares, respectively,
representing the ESOP shares which have not been committed for release
during the nine months ended September 30, 1997. Thus, it is assumed
at September 30, 1997 that 26,906,750, 31,655,000, 36,403,250 and
41,863,788 shares of Common Stock are outstanding at the minimum,
midpoint, maximum and 15% above the maximum of the Amended Valuation
Range, respectively. Assuming the uncommitted ESOP shares were not
subtracted from the number of shares of Common Stock outstanding at
September 30, 1997, the offering price as a multiple of pro forma net
earnings per share would be 12.20x, 13.84x, 15.37x and 17.00x at the
minimum, midpoint, maximum and 15% above the maximum of the Amended
Valuation Range, respectively. For purposes of calculating pro forma
stockholders' equity per share, it is assumed that shares outstanding
total 29,006,250, 34,125,000, 39,243,750 and 45,130,313 shares at the
minimum, midpoint, maximum and 15% above the maximum of the Amended
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 sold in the Offerings, or 2,762,500,
3,250,000, 3,737,500 and 4,298,125 shares at the minimum, midpoint,
maximum and 15% above the maximum of the Amended 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
$12.00 per share and that the shares to fund the Recognition Plan are
acquired through open market purchases at the Amended Purchase Price,
pro forma net earnings per share for the nine months ended September
30, 1997 would be $0.75, $0.66, $0.60 and $0.54 at the minimum,
midpoint, maximum and 15% above the maximum of the Amended Valuation
Range, respectively, and pro forma stockholders' equity per share at
September 30, 1997 would be $16.40, $15.49, $14.82 and $14.24 at the
minimum, midpoint, maximum and 15% above the maximum of such range,
respectively. See "Management - Benefits - Stock Option Plan" in the
Prospectus.
(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 the Prospectus. 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" in the Prospectus. 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 Amended Valuation Range of
up to 15%.
14
<PAGE> 19
<TABLE>
<CAPTION>
At or For the Year Ended December 31, 1996
-----------------------------------------------------------
27,625,000 32,500,000 37,375,000 42,981,250
Shares Sold Shares Sold Shares Sold Shares Sold
at $12.00 at $12.00 at $12.00 at $12.00
Per Share Per Share Per Share Per 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 . . . . . . . . . . . . . . . . . . $331,500 $390,000 $448,500 $515,775
Plus: Shares acquired by Foundation (equal to
5% of the shares issued in the Conversion) . . . 16,575 19,500 22,425 25,789
-------- -------- -------- --------
Pro forma market capitalization . . . . . . . . . $348,075 $409,500 $470,925 $541,564
======== ======== ======== ========
Gross proceeds . . . . . . . . . . . . . . . . . . $331,500 $390,000 $448,500 $515,775
Less offering expenses and commissions . . . . . . 6,932 7,551 8,170 8,882
-------- -------- -------- --------
Estimated net proceeds . . . . . . . . . . . . . 324,568 382,449 440,330 506,893
Less: Shares purchased by the ESOP . . . . . . . . (26,520) (31,200) (35,880) (41,262)
Shares purchased by the
Recognition Plan . . . . . . . . . . . . . (13,260) (15,600) (17,940) (20,631)
-------- -------- -------- --------
Total estimated net proceeds, as adjusted(1) . . . $284,788 $335,649 $386,510 $445,000
======== ======== ======== ========
Net income (2):
Historical . . . . . . . . . . . . . . . . . . . $ 21,775 $ 21,775 $ 21,775 $ 21,775
Pro forma income on net proceeds, as
adjusted . . . . . . . . . . . . . . . . . . . 8,286 9,766 11,246 12,948
Pro forma ESOP adjustment(3) . . . . . . . . . . (937) (1,102) (1,268) (1,458)
Pro forma Recognition Plan
adjustment(4) . . . . . . . . . . . . . . . . . (1,406) (1,654) (1,902) (2,187)
-------- -------- -------- --------
Pro forma net income . . . . . . . . . . . . . . $ 27,718 $ 28,785 $ 29,851 $ 31,078
======== ======== ======== ========
Net income per share(2)(5):
Historical . . . . . . . . . . . . . . . . . . . $ 0.81 $ 0.69 $ 0.60 $ 0.52
Pro forma income on net proceeds, as
adjusted . . . . . . . . . . . . . . . . . . . 0.31 0.31 0.31 0.31
Pro forma ESOP adjustment(3) . . . . . . . . . . (0.03) (0.03) (0.03) (0.03)
Pro forma Recognition Plan
adjustment(4) . . . . . . . . . . . . . . . . . (0.05) (0.05) (0.05) (0.05)
-------- -------- -------- --------
Pro forma net income per share(4)(6) . . . . . . $ 1.04 $ 0.92 $ 0.83 $ 0.75
======== ======== ======== ========
Offering price to pro forma net
income per share (5) . . . . . . . . . . . . . . 11.54x 13.04x 14.46x 16.00x
======== ======== ======== ========
Stockholders' equity:
Historical . . . . . . . . . . . . . . . . . . . $171,080 $171,080 $171,080 $171,080
Estimated net proceeds . . . . . . . . . . . . . 324,568 382,449 440,330 506,893
Plus: Shares issued to Foundation . . . . . . . . 16,575 19,500 22,425 25,789
Less: Contribution to Foundation . . . . . . . . (16,575) (19,500) (22,425) (25,789)
Plus: Tax benefit of the contribution
to Foundation . . . . . . . . . . . . . . 7,790 9,165 10,540 12,121
Less: Common Stock acquired
by the ESOP(3) . . . . . . . . . . . . . (26,520) (31,200) (35,880) (41,262)
Common Stock to be acquired by
the Recognition Plan(4) . . . . . . . . . (13,260) (15,600) (17,940) (20,631)
-------- -------- -------- --------
Pro forma stockholders' equity(4)(6)(7) . . . . . $463,658 $515,894 $568,130 $628,201
======== ======== ======== ========
Stockholders' equity per share(5):
Historical . . . . . . . . . . . . . . . . . . . $ 5.90 $ 5.01 $ 4.36 $ 3.79
Estimated net proceeds . . . . . . . . . . . . . 11.19 11.21 11.22 11.23
Plus: Shares issued to Foundation . . . . . . . . 0.57 0.57 0.57 0.57
Less: Contribution to Foundation . . . . . . . . (0.57) (0.57) (0.57) (0.57)
Plus: Tax benefit of contribution to
Foundation . . . . . . . . . . . . . . 0.27 0.27 0.27 0.27
Less: Common Stock acquired
by the ESOP(3) . . . . . . . . . . . . . (0.91) (0.91) (0.91) (0.91)
Common Stock to be acquired by
the Recognition Plan(4) . . . . . . . . . (0.46) (0.46) (0.46) (0.46)
-------- -------- -------- --------
Pro forma stockholders' equity
per share(4)(6)(7) . . . . . . . . . . . . . . $ 15.99 $ 15.12 $ 14.48 $ 13.92
======== ======== ======== ========
Offering price as a percentage of pro
forma stockholders' equity per share(5) . . . . . 75.05% 79.37% 82.87% 86.21%
======== ======== ======== ========
Offering price as a percentage of pro forma
tangible stockholders' equity per share(5) . . . 78.53% 82.64% 85.96% 89.09%
======== ======== ======== ========
</TABLE>
(Footnotes on following page)
15
<PAGE> 20
- --------------------------------
(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 $12.00 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 $8.9 million,
$10.3 million, $11.9 million and $13.7 million at the minimum,
midpoint, maximum and maximum as adjusted, of the Amended 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 $0.71, $0.59, $0.50 and $0.42, at the
minimum, midpoint, maximum and maximum as adjusted, respectively. Per
share net income data is based on 26,943,583, 31,698,333, 36,453,083
and 41,921,046 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 $12.00 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 -Benefits - Employee Stock Ownership Plan" in
the Prospectus.
(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 Amended 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 sold 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
$1.00, $0.89, $0.80 and $0.73, at the minimum, midpoint, maximum and
15% above the maximum of the Amended Valuation Range, respectively,
and pro forma stockholders' equity per share at December 31, 1996
would be $15.84, $15.00, $14.39 and $13.85 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 Amended
Purchase Price. See "Management - Benefits - Recognition Plan" in the
Prospectus.
(footnotes continued on following page)
16
<PAGE> 21
(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 93.3% 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 26,943,583,
31,698,333, 36,453,083 and 41,921,046 shares of Common Stock are
outstanding at the minimum, midpoint, maximum and 15% above the
maximum of the Amended 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 12.56x,
14.23x, 15.78x and 17.43x at the minimum, midpoint, maximum and 15%
above the maximum of the Amended Valuation Range, respectively.
(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 sold in the Offerings, or 2,762,500,
3,250,000, 3,737,500 and 4,298,125 shares at the minimum, midpoint,
maximum and 15% above the maximum of the Amended 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
$12.00 per share and that the shares to fund the Recognition Plan are
acquired through open market purchases at the Amended Purchase Price,
pro forma net earnings per share for the year ended December 31, 1996
would be $0.97, $0.86, $0.78 and $0.70 at the minimum, midpoint,
maximum and 15% above the maximum of the Amended Valuation Range,
respectively, and pro forma stockholders' equity per share at December
31, 1996 would be $15.64, $14.85, $14.26 and $13.75 at the minimum,
midpoint, maximum and 15% above the maximum of such range,
respectively. See "Management - Benefits - Stock Option Plan" in the
Prospectus.
(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 the Prospectus. 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" in the Prospectus. 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 Amended Valuation Range of
up to 15%.
17
<PAGE> 22
REGULATORY CAPITAL
At September 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 September 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 September 30, 1997.
18
<PAGE> 23
<TABLE>
<CAPTION>
Pro Forma at September 30, 1997 Based on
-------------------------------------------------
27,625,000 32,500,000
Shares Sold Shares Sold
Historical at at $12.00 at $12.00
September 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 . . . . . . . . $164,631 7.79% $294,925 12.99% $318,221 13.85%
Requirement . . . . . . 31,694 1.50 34,046 1.50 34,466 1.50
-------- ----- ------- ----- ------- -----
Excess . . . . . . . . $132,937 6.29% $260,879 11.49% $283,755 12.35%
======= ===== ======= ===== ======= =====
Core capital(2)(3):
Actual . . . . . . . . $169,200 8.01% $299,494 13.20% $322,790 14.05%
Requirement . . . . . . 63,524 3.00 68,228 3.00 69,068 3.00
-------- ----- ------- ----- ------- -----
Excess . . . . . . . . $105,676 5.01% $231,266 10.20% $253,722 11.05%
======= ===== ======= ===== ======= =====
Risk-based capital(2)(3):
Actual . . . . . . . . $181,234 18.87% $311,528 29.99% $334,824 31.81%
Requirement . . . . . . 76,820 8.00 83,093 8.00 84,212 8.00
-------- ----- ------- ----- ------- -----
Excess . . . . . . . . $104,414 10.87% $ 228,436 21.99% $250,612 23.81%
======= ===== ======== ===== ======= =====
</TABLE>
<TABLE>
<CAPTION>
Pro Forma at September 30, 1997 Based on
-------------------------------------------------
37,375,000 42,981,250
Shares Sold Shares Sold
at $12.00 at $12.00
Per Share Per Share
---------------------- -----------------------
Percent of Percent of
Amount Assets(1) Amount Assets(1)
-------- ---------- -------- ----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Tangible capital(2):
Actual . . . . . . . . $341,516 14.68% $368,305 15.62%
Requirement . . . . . . 34,885 1.50 35,368 1.50
------- ----- ------- -----
Excess . . . . . . . . $306,630 13.18% $332,937 14.12%
======= ===== ======= =====
Core capital(2)(3):
Actual . . . . . . . . $346,085 14.88% $372,874 15.81%
Requirement . . . . . . 69,907 3.00 70,872 3.00
------- ----- ------- -----
Excess . . . . . . . . $276,178 11.88% $302,002 12.81%
======= ===== ======= =====
Risk-based capital(2)(3):
Actual . . . . . . . . $358,119 33.57% $384,908 35.55%
Requirement . . . . . . 85,331 8.00 86,617 8.00
------- ----- ------- -----
Excess . . . . . . . . $272,788 25.57% $298,291 27.55%
======= ===== ======= =====
</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 August 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" in the Prospectus.
19
<PAGE> 24
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 $427.5 million at the
midpoint of the Amended Valuation Range, which is approximately $18 million
greater than the pro forma aggregate market capitalization of the Company if
the Foundation is included, and would result in an approximately $37.5 million
increase in the amount of Common Stock offered for sale in the Conversion. The
pro forma price to book ratio would be approximately the same under both the
current appraisal and the estimate of the value of the Company without the
Foundation and the pro forma price to earnings ratio would be slightly lower
under the current appraisal and the estimate of the value of the Company
without the Foundation. Further, assuming the midpoint of the Amended
Valuation Range, pro forma stockholders' equity per share and pro forma
earnings per share would be substantially the same at $15.83 and $15.82,
respectively, and $0.70 and $0.69, respectively, with the Foundation or without
the Foundation. 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 Amended Valuation Range, assuming the Conversion
was completed at September 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 . . . . . . . . . . . . . . $ 331,500 $ 363,375 $ 390,000 $ 427,500
Pro forma market capitalization . . . . . . . . . . . 348,075 363,375 409,500 427,500
Total assets . . . . . . . . . . . . . . . . . . . . 2,437,078 2,457,000 2,489,314 2,512,752
Total liabilities . . . . . . . . . . . . . . . . . . 1,949,217 1,949,217 1,949,217 1,949,217
Pro forma stockholders' equity . . . . . . . . . . . 487,861 507,783 540,097 563,535
Pro forma consolidated net earnings . . . . . . . . . 21,398 21,829 22,188 22,695
Pro forma stockholders' equity per share . . . . . . 16.82 16.77 15.83 15.82
Pro forma consolidated net earnings per
share . . . . . . . . . . . . . . . . . . . . . . 0.79 0.78 0.70 0.69
Pro forma pricing ratios:
Offering price as a percentage of pro
forma stockholders' equity per
share . . . . . . . . . . . . . . . . . . . . . 71.34% 71.56% 75.81% 75.85%
Offering price to pro forma net
earnings per share (1) . . . . . . . . . . . . . 11.39x 11.54x 12.86x 13.04x
Pro forma market capitalization to
assets . . . . . . . . . . . . . . . . . . . . . 14.28% 14.79% 16.45% 17.01%
Pro forma financial ratios:
Return on assets (2) . . . . . . . . . . . . . . . 1.17% 1.18% 1.19% 1.20%
Return on stockholders' equity (3) . . . . . . . . 5.85% 5.73% 5.48% 5.37%
Stockholders' equity to assets . . . . . . . . . . 20.02% 20.67% 21.70% 22.43%
</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 . . . . . . . . . . . . . . $ 448,500 $ 491,625 $ 515,775 $ 565,369
Pro forma market capitalization . . . . . . . . . . . 470,925 491,625 541,564 565,369
Total assets . . . . . . . . . . . . . . . . . . . . 2,541,550 2,568,504 2,601,621 2,632,618
Total liabilities . . . . . . . . . . . . . . . . . . 1,949,217 1,949,217 1,949,217 1,949,217
Pro forma stockholders' equity . . . . . . . . . . . 592,333 619,287 652,404 683,401
Pro forma consolidated net earnings . . . . . . . . . 22,978 23,561 23,887 24,555
Pro forma stockholders' equity per share . . . . . . 15.10 15.12 14.46 14.50
Pro forma consolidated net earnings per
share . . . . . . . . . . . . . . . . . . . . . . 0.63 0.62 0.57 0.56
Pro forma pricing ratios:
Offering price as a percentage of pro
forma stockholders' equity per
share . . . . . . . . . . . . . . . . . . . . . 79.47% 79.37% 82.99% 82.76%
Offering price to pro forma net
earnings per share (1) . . . . . . . . . . . . . 14.29x 14.52x 15.79x 16.07x
Pro forma market capitalization to
assets . . . . . . . . . . . . . . . . . . . . . 18.53% 19.14% 20.82% 21.48%
Pro forma financial ratios:
Return on assets (2) . . . . . . . . . . . . . . . 1.21% 1.22% 1.22% 1.24%
Return on stockholders' equity (3) . . . . . . . . 5.17% 5.07% 4.88% 4.79%
Stockholders' equity to assets . . . . . . . . . . 23.31% 24.11% 25.08% 25.96%
</TABLE>
20
<PAGE> 25
- ----------------------
(1) If the contribution to the Foundation had been expensed during the nine
months ended September 30, 1997, the offering price to pro forma net
earnings per share would have been 19.15x, 24.32x, 30.00x and 37.50x at
the minimum, midpoint, maximum and maximum, as adjusted, respectively.
(2) If the contribution to the Foundation had been expensed during the nine
months ended September 30, 1997, return on assets would have been 0.69%,
0.63%, 0.58% and 0.52% at the minimum, midpoint, maximum and maximum, as
adjusted, respectively.
(3) If the contribution to the Foundation had been expensed during the nine
months ended September 30, 1997, return on stockholders' equity would have
been 3.45%, 2.93%, 2.50% and 2.09% at the minimum, midpoint, maximum and
maximum, as adjusted, respectively.
21
<PAGE> 26
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 Supplement does not
contain all the information set forth in the Registration Statement. Such
information, including the Conversion Valuation Appraisal Report, as updated
and revised, 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 Supplement 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 Supplement 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 Supplement 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 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 the Certificate of Incorporation
and 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: Frank J. Besignano, Senior Vice President, Staten Island
Savings Bank, 15 Beach Street, Staten Island, New York 10304.
22
<PAGE> 27
SELECTED RECENT FINANCIAL INFORMATION
Index to Selected Recent Financial Information
<TABLE>
<CAPTION>
Table of Contents PAGE
- ----------------- ----
<S> <C> <C>
Financial Statements:
Statement of Condition
As of September 30, 1997 and December 31, 1996 (unaudited) 24
Statement of Income (For three months and nine months ended
September 30, 1997 and 1996)(unaudited) 25
Statement of Equity (For nine months ended September 30, 1997
and 1996)(unaudited) 26
Statement of Cash Flows (For the nine months ended September
30, 1997 and 1996)(unaudited) 27
Notes to Financial Statements (unaudited) 28
Management's Discussion and Analysis of Financial Condition
and Results of Operations 32
</TABLE>
23
<PAGE> 28
STATEN ISLAND SAVINGS BANK
STATEMENTS OF CONDITION (unaudited)
<TABLE>
<CAPTION>
--------------------------------------------
ASSETS SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------- -------------------
(Dollars In Thousands)
<S> <C> <C>
ASSETS:
Cash and due from banks $ 48,445 $ 43,522
Federal funds sold 36,300 9,100
Securities available for sale 960,375 703,134
Loans, net 1,037,862 968,015
Accrued interest receivable 12,968 11,739
Bank premises and equipment, net 19,945 18,675
Intangible assets, net 18,933 20,490
Other assets 9,672 7,648
------------------- -------------------
Total assets $ 2,144,500 $ 1,782,323
=================== ===================
LIABILITIES AND EQUITY
LIABILITIES:
Deposits-
Savings $ 815,817 $ 832,584
Time 547,230 500,570
Money market 83,381 79,704
NOW accounts 27,417 14,298
Demand deposits 192,647 150,592
------------------- -------------------
1,666,492 1,577,748
Borrowed funds 245,841 54
Advances from borrowers for taxes and insurance 5,798 4,563
Accrued interest and other liabilities 31,086 28,878
------------------- -------------------
Total liabilities 1,949,217 1,611,243
------------------- -------------------
EQUITY:
Retained Earnings 183,947 166,950
Unrealized appreciation on securities available for
sale, net of taxes 11,336 4,130
------------------- -------------------
Total equity 195,283 171,080
------------------- -------------------
Total liabilities and equity $ 2,144,500 $ 1,782,323
=================== ===================
</TABLE>
24
<PAGE> 29
STATEN ISLAND SAVINGS BANK
STATEMENTS OF INCOME (unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
-------------------------------------------
1997 1996
-------------------------------------------
(Dollars In Thousands)
<S> <C> <C>
Interest income:
Loans, including fees $ 21,071 $ 18,965
Securities available for sale and held to maturity 13,619 11,889
Federal funds sold 541 268
-------------------- ------------------
Total interest income 35,231 31,122
-------------------- ------------------
Interest expense:
Savings accounts 5,479 5,308
Time deposits 6,967 6,470
Money market accounts 611 609
NOW accounts 115 282
Escrow accounts 22 19
Borrowed funds 1,888 1
-------------------- ------------------
Total interest expense 15,082 12,689
-------------------- ------------------
Net interest and dividend income 20,149 18,433
-------------------- ------------------
Provision for loan losses 501 500
Net interest income after provision
-------------------- ------------------
for possible loan losses 19,648 17,933
Other income (loss):
Service and fee income 1,925 1,615
Securities transactions 193 (402)
-------------------- ------------------
Total other income (loss) 2,118 1,213
Other expenses
Personnel 5,858 5,311
Occupancy and equipment 1,449 1,299
Amortization of intangible assets 519 519
FDIC insurance 75 1
Data processing 1,048 593
Marketing 324 325
Professional fees 253 365
Stationery and supplies 254 225
Other 1,688 1,523
-------------------- ------------------
Total other expenses 11,468 10,161
-------------------- ------------------
Income before provision for income taxes 10,298 8,985
-------------------- ------------------
Provision for income taxes 4,261 2,739
-------------------- ------------------
Net income $ 6,037 $ 6,246
==================== ==================
<CAPTION>
FOR THE NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------------------------
1997 1996
(Dollars In Thousands)
---------------------------------------------
<S> <C> <C>
Interest income:
Loans, including fees $ 61,591 $ 53,898
Securities available for sale and held to maturity 36,984 36,130
Federal funds sold 1,742 1,074
-------------------- ------------------
Total interest income 100,317 91,102
-------------------- ------------------
Interest expense:
Savings accounts 16,240 15,804
Time deposits 20,033 19,260
Money market accounts 1,821 1,825
NOW accounts 269 818
Escrow accounts 66 59
Borrowed funds 2,441 5
-------------------- ------------------
Total interest expense 40,870 37,771
-------------------- ------------------
Net interest and dividend income 59,447 53,331
Provision for loan losses 5,502 500
Net interest income after provision
-------------------- ------------------
for possible loan losses 53,945 52,831
Other income (loss):
Service and fee income 5,581 4,829
Securities transactions (412) (184)
-------------------- ------------------
Total other income (loss) 5,169 4,645
Other expenses
Personnel 15,954 15,055
Occupancy and equipment 4,233 4,125
Amortization of intangible assets 1,557 1,624
FDIC insurance 197 2
Data processing 3,186 2,103
Marketing 972 976
Professional fees 683 760
Stationery and supplies 942 643
Other 5,181 4,818
-------------------- ------------------
Total other expenses 32,905 30,106
-------------------- ------------------
Income before provision for income taxes 26,209 27,370
Provision for income taxes 9,212 10,782
-------------------- ------------------
Net income $ 16,997 $ 16,588
==================== ==================
</TABLE>
25
<PAGE> 30
STATEN ISLAND SAVINGS BANK
STATEMENTS OF CHANGES IN EQUITY (unaudited)
<TABLE>
<CAPTION>
UNREALIZED
GAIN (LOSS)
ON SECURITIES
RETAINED AVAILABLE FOR SALE, TOTAL
EARNINGS NET OF TAXES EQUITY
------------------- ------------------- -------------------
(Dollars In Thousands)
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 $ 145,175 $ 4,907 $ 150,082
Net Income 16,558 16,558
Change in unrealized loss on securities
available for sale, net of taxes (4,036) (4,036)
------------------- ------------------- -------------------
BALANCE, SEPTEMBER 30, 1996 $ 161,733 $ 871 $ 162,604
=================== =================== ===================
BALANCE, DECEMBER 31, 1996 $ 166,950 $ 4,130 $ 171,080
Net Income 16,997 16,997
Change in unrealized gain on securities
available for sale, net of taxes 7,206 7,206
------------------- ------------------- -------------------
BALANCE, SEPTEMBER 30, 1997 $ 183,947 $ 11,336 $ 195,283
=================== =================== ===================
</TABLE>
26
<PAGE> 31
STATEN ISLAND SAVINGS BANK
STATEMENT OF CASH FLOWS (unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30
------------- --------------
1997 1996
------------- --------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 16,997 $ 16,588
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 1,267 1,165
Amortization (accretion) of bond and mortgage premiums (discounts) 187 493
Amortization of intangible assets 1,557 1,624
Loss (gain) on sale of available for sale securities 412 184
Other noncash expense (income) (2,919) (2,730)
Provision for loan losses 5,502 500
Increase in deferred loan fees 206 626
Decrease (increase) in accrued interest receivable (1,230) 1,365
Decrease (increase) in other assets (2,024) (4,376)
(Decrease) increase in accrued interest and other liabilities (143) (10,001)
(Increase) decrease in deferred income taxes (4,855) 2,247
Recoveries 717 840
------------- --------------
Net cash provided by operating activities 15,674 8,525
------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
REDEMPTION OF TRADING SECURITIES 20,564
Maturities of available for sale securities 117,133 193,856
Sales of available for sale securities 51,805 225,286
Purchases of available for sale securities (431,865) (351,143)
Principal collected on loans 157,778 122,457
Loans made to customers (235,144) (253,364)
Purchases of loans
Sales of loans 2,967 3,071
Capital expenditures (2,554) (2,605)
------------- --------------
Net cash used in investing activities (319,316) (62,442)
------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposit accounts 89,978 46,004
Borrowings 245,787 (1)
------------- --------------
Net cash provided by financing activities 335,765 46,003
------------- --------------
Net (decrease) increase in cash and cash equivalents 32,123 (7,914)
CASH AND CASH EQUIVALENTS, beginning of year 52,622 76,464
------------- --------------
CASH AND CASH EQUIVALENTS, end of year $ 84,745 $ 68,550
============= ==============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for - $ 39,652 37,777
Interest 13,945 $ 12,390
Income taxes ============= ==============
</TABLE>
27
<PAGE> 32
STATEN ISLAND SAVINGS BANK
Notes to Financial Statements (unaudited)
(1) Summary of Significant Accounting Policies
Basis of Financial Statement Presentation
Staten Island Bancorp, Inc. (the Company) is a Delaware corporation organized in
July 1997 by Staten Island Savings Bank (the Bank) in connection with the
conversion of the Bank from a federally chartered mutual savings bank to a
federally chartered stock savings bank. For purposes of this Prospectus
Supplement the financial statements of the Company have been omitted because
as of September 30, 1997, the Company had not yet issued any stock, had no
assets (other than advance subscription proceeds) and no liabilities, and had
not yet conducted any business other than of an organizational nature.
Alternatively, the unaudited financial statements and the Management's
Discussion and Analysis of Financial Condition and Results of the Operations
presented herein are for the Bank as a predecessor entity to the Company. No
proforma effect has been given to the sale of the Company's common stock in the
Conversion.
The accompanying financial statements are unaudited and were prepared
consistent with instructions to a Quarterly Report on Form-10Q and therefore,
do not include information or footnotes necessary for a complete presentation
of financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. All normal, recurring adjustments
which, in the opinion of management, are necessary for a fair presentation of
the financial statements have been included. The results of operations for the
three and nine months ended September 30, 1997 are not necessarily indicative
of the results to be expected for the year ending December 31, 1997. These
interim financial statements should be read in conjunction with the Bank's
audited financial statements and note disclosures contained in the Company's
Prospectus dated September 12, 1997.
28
<PAGE> 33
2. Loan Portfolio Composition. The following table sets forth the composition
of the Bank's loans at the dates indicated.
<TABLE>
<CAPTION>
------------------------------------- --------------------------------
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------------------------------- --------------------------------
PERCENT OF PERCENT OF
AMOUNT TOTAL AMOUNT TOTAL
----------------- ----------------- ----------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Mortgage loans:
Single-family residential $ 827,272 79.71% $ 720,873 74.47%
Multi-family residential 29,019 2.80% 26,444 2.73%
Commercial real estate 115,817 11.16% 115,593 11.94%
Construction and land 41,090 3.96% 28,779 2.97%
Home equity 5,984 0.58% 29,680 3.07%
----------------- ----------------- ----------------- -------------
Total mortgage loans 1,019,182 98.20% 921,369 95.18%
Other loans:
Student loans 3,729 0.36% 4,522 0.47%
Automobile leases - 0.00% 28,249 2.92%
Passbook loans 6,830 0.66% 5,933 0.61%
Commercial business loans 15,066 1.45% 14,995 1.55%
Other consumer loans 12,560 1.21% 9,712 1.00%
----------------- ----------------- ----------------- -------------
Total other loans 38,185 3.68% 63,411 6.55%
----------------- ----------------- ----------------- -------------
Total loans receivable 1,057,367 101.88% 984,780 101.73%
Less:
Discount on loans purchased (728) (0.07)% (3,475) (0.36)%
Allowance for loan losses (14,530) (1.40)% (9,977) (1.03)%
Deferred loan fees (4,247) (0.41)% (3,313) (0.34)%
----------------- ----------------- ----------------- -------------
Loans receivable, net $ 1,037,862 100.00% $ 968,015 100.00%
================= ================= ================= =============
</TABLE>
29
<PAGE> 34
3. Non-Performing Assets. The following table sets forth information
with respect to non-performing assets identified by the Bank, including
non-accrual loans, other real estate owned, and non-performing investments in
real estate at the dates indicated.
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
-------------------- --------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Accruing loans 90 days or more
past due:
Mortgage loans: $ 66 $ -
Other loans: 342 1
-------------------- --------------------
Total accruing loans 408 1
-------------------- --------------------
Non-accrual loans:
Mortgage loans:
Single-family residential 10,338 10,417
Multi-family residential 934 322
Commercial real estate 9,668 11,102
Construction and land 1,469 -
Home equity 545 644
Other loans:
Automobile leases - 15
Commercial and discounted business loans 194 106
Other loans 392 144
-------------------- --------------------
Total non-accruing loans 23,540 22,750
-------------------- --------------------
Total non-performing loans 23,948 22,751
-------------------- --------------------
Other real estate owned, net 780 1,103
-------------------- --------------------
-------------------- --------------------
Total non-performing assets $ 24,728 $ 23,854
==================== ====================
Non-performing assets to total
loans 2.35% 2.42%
Non-performing assets to total
assets 1.15% 1.34%
Non-performing loans to total
loans 2.28% 2.31%
Non-performing loans to total
assets 1.12% 1.28%
</TABLE>
30
<PAGE> 35
4. ALLOWANCE FOR LOAN LOSSES. The following table sets forth the activity
in the Bank's allowance for loan losses during the periods
indicated.
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------------------------------- -------------------
1997 1996 1996
----------------- ------------------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Allowance at beginning of period $ 9,977 $ 10,704 $ 10,704
Provisions 5,502 500 1,000
Charge-offs:
Mortgage loans:
Construction, land and land development 2 - -
Single-family residential 624 1,137 1,590
Multi-family residential 100 - -
Commercial real estate 444 239 376
Other loans 485 329 729
----------------- ------------------- -------------------
Total charge-offs 1,655 1,705 2,695
Recoveries:
Mortgage loans:
Construction, land and land development 10 - -
Single-family residential 295 345 408
Multi-family residential - - -
Commercial real estate 238 388 413
Other loans 163 107 147
----------------- ------------------- -------------------
Total recoveries 706 840 968
----------------- ------------------- -------------------
Allowance at end of period $ 14,530 $ 10,339 $ 9,977
================= =================== ===================
Allowance for loan losses
to total nonperforming loans at
end of period 61.72% 44.50% 43.85%
Allowance for loan losses
to total loans at end of period 1.38% 1.10% 1.02%
</TABLE>
31
<PAGE> 36
- Managements Discussion and Analysis of Financial Condition and Results
of Operation Changes in Financial Conditions
Total assets of the Bank increased $362.2 million or 20.3% from $1.79
billion December 31, 1996 to $2.14 billion September 30, 1997.
The increase in total assets for the first nine months of 1997 was
primarily due to a $257.2 million, or 36.6% increase in the Bank's
investment portfolio which is a result of the Bank's leveraging program
and the use of borrowed funds to purchase securities for the Bank's
investment portfolio at an acceptable spread.
Loans receivable net increased $69.8 million or 7.2% to $1.04 billion at
September 30, 1997 compared to $968.0 million at December 31, 1996. Such
increase was due to continued growth in the loan portfolio.
Deposits increased $88.7 million or 5.6% from $1.6 billion at December
31, 1996 to $1.7 billion at September 30, 1997. The largest increase was
in time deposits and demand deposits which increased $46.7 million and
$42.1 million, respectively. The growth in time deposits was primarily
due to an increase in deposits made in anticipation of payment for the
Company's stock offering. The growth in demand deposits was a result of
the Bank's continued emphasis on business development and in anticipation
of the Company's stock offering.
Borrowed funds totaled $245.8 million at September 30, 1997 compared to
$54,000 at December 31,1996. Management has deemed borrowings to be a
cost-effective alternative to deposits which facilitate the Bank's
ability to leverage its balance sheet. Borrowed funds consist primarily
of short-term repurchase agreements maturing prior to September 30, 1998.
Equity increased by $24.2 million or 14.1% from $171.1 million at
December 31, 1996 to $195.3 million at September 30, 1997. The increase
was a result of net income of $17.0 million and an unrealized gain on the
Bank's securities available for sale of $11.3 million at September 30,
1997 compared to $4.1 million at December 31, 1996. The recent volatility
in the financial markets has resulted in the appreciation in value of the
Bank's investment portfolio.
Results of Operations
The Bank reported net income of $6.0 million for the three months ended
September 30, 1997 compared to $6.2 million for the three months ended
September 30, 1996 a decrease of $209,000 or 3.3%. The decrease in net
income was primarily the result of an increase of $1.3 million in total
other expenses and an increase in the provision for income taxes of $1.5
million partially offset by increases in net interest income of $1.7
million and other income of $905,000.
Net income for the nine months ended September 30, 1997 amounted to $17.0
million compared to $16.6 million for the nine months ended September 30,
1996. The increase of $409,000 or 2.5% was primarily due to an increase
of $6.1 million in net interest income and a $1.6 million decrease in
the provision for income taxes, partially offset by a $5.0 million
increase in the provision for loan losses and a $2.8 million increase in
total other expenses.
32
<PAGE> 37
Interest Income
The Bank's total interest income was $35.2 million for the three months ended
September 30 1997 compared to $31.1 million for the three months ended September
30, 1996. The $4.1 million or 13.2% increase was primarily due to a $2.1 million
increase in interest income from loans and a $1.7 million increase in interest
income from securities. The primary reason for the increase in interest income
from loans was an increase of $118.6 million in the average balance of loans
partially offset by a decrease in the average yield of 14 basis points from
8.27% to 8.13%. The average balance of the loan portfolio increased due to
increased loan demand, new loan products and continued emphasis on commercial
and other lending. The decrease in the average yield on the loan portfolio was
primarily due to the increased loan repayment activity in higher yielding loans
and the downward pricing of certain of the Bank's adjustable rate loans. The
increase in interest income on securities was due to a $81.5 million increase in
the average balance of the securities portfolio and a 20 basis point increase in
the average yield on the securities portfolio. The increase in the average
balance is a result of the Bank's leveraging strategy.
For the nine months ended September 30, 1997 interest income totaled $100.3
million compared with $91.1 million for the nine months ended September 30,
1996. The $9.2 million or 10.1% increase between the periods was primarily the
result of higher interest income for loans and securities. Interest on loans
increased $7.7 million or 14.3% as a result of a $146.3 million increase in the
average balance of the loan portfolio. This was offset to some extent by a
decrease in the average yield on loans from 8.28% for the nine months ended
September 30, 1996 to 8.10% for the nine months ended September 30, 1997. These
changes for the nine month period were due primarily to the same factors
described above with respect to the changes during the third quarter of 1997
compared to the third quarter of 1996. Interest income on securities increased
$854,000 or 2.4% primarily as a result of an increase in the average yield to
6.66% for the nine months ended September 30, 1997 compared to 6.37% for the
nine months ended September 30, 1996. This increase in yield was partially
offset by a $15.5 million decrease in the average balance of securities during
the same time period.
The increase in the average yield reflects the sale of lower rate securities to
purchase higher yielding securities in connection with the Bank's restructuring
of its investment securities portfolio in the past twelve months, while the
decrease in the average balance is a result of the paydowns and maturities
earlier in the year exceeding the investment due to the funding of lending
activities.
Interest Expense
The Bank's total interest expense was $15.1 million for the three months ended
September 30, 1997 compared with $12.7 million for the three months ended
September 30, 1996. The increase of $2.4 million or 18.9% was primarily due to
an increase of $497,000 in interest for time deposits and $1.9 million increase
in interest expense on borrowed funds. The increase in interest expense for time
deposits was primarily due to an increase of $41.6 million in the average
balance of time deposits primarily due to deposits in anticipation of payment
for the Company's stock offering. The increase in interest expense for borrowed
funds was due to an increase in the
33
<PAGE> 38
average balance of $125.2 million due to the Bank's leveraging strategy which
was not in place during the third quarter of 1996.
Interest expense was $40.9 million for the nine months ended September 30, 1997
compared to $37.8 million for nine months ended September 30, 1996, an increase
of $3.1 million or 8.20%. Interest on borrowed funds increased $2.4 million due
to a $55.4 million increase in the average balance of borrowings between the
periods. Average borrowings for the nine months ended September 30, 1996 was
$47,000. The significant increase in the average balance reflects the leveraging
strategy instituted by the Bank during the current fiscal year. The average
balance of interest bearing deposits increased by $82.6 million from September
30, 1996 to September 30, 1997, while the average cost of these deposits
decreased from 3.66% for the nine months ended September 30, 1996 to 3.52% for
the nine months ended September 30, 1997. This was a result of the Bank's
continued business development efforts for demand deposits along with deposits
made in anticipation of payment for the Company's stock offering.
Net Interest Income
Net interest income increased $1.7 million or 9.3% in the three months ended
September 30, 1997 to $20.1 million, compared to $18.4 million in the same
period in 1996. Such increase was due to a $4.1 million increase in interest
income which was partially offset by a $2.4 million increase in interest
expense. The increase in interest income was due to an increase of $218.9
million or 13% in the average balance of interest earning assets. The average
yield on interest earning assets was 7.30% for the three months ended September
30, 1997 compared with 7.42% for the three months ended September 30, 1996. The
increase in interest expense was due to an increase of $211.8 million or 15.3%
in the average balance of interest bearing liabilities. The average cost of
interest bearing liabilities for the third quarter of 1997 was 3.78% compared
with 3.66% for the same period last year. The Bank's interest rate spread (the
difference between the weighted average yield on interest earning assets and
weighted average cost of interest bearing liabilities) and net interest margin
(net interest income as a percentage of average interest earning assets)
amounted to 3.65% and 4.25%, respectively during the three months ended
September 30, 1997 compared to 3.75% and 4.39, respectively, for the comparable
period in 1996.
Net interest income was $59.4 million for the nine months ended September 30,
1997 compared to $53.3 million for the nine months ended September 30, 1996.
This represents an increase of $6.1 million or 11.5%. The increase was a result
of a $9.2 million increase in interest income which was partially offset by a
$3.1 million increase in interest expense. The increase in interest income was
a result of an increase of $146.8 million in the average balance of interest
earning assets along with an increase of 8 basis points from 7.36% for the nine
months ended September 30, 1996 to 7.44% for the nine months ended September
30, 1997 in the average yield on interest earning assets. Interest expense
increased due to a $38.0 million increase in the average balance of interest
bearing liabilities which was partially offset by a decrease of 6 basis points
in the average rate paid from 3.66% for the nine months ended September 30,
1996 to 3.60% for the nine months ended September 30, 1997. The net interest
spread and margin increased to 3.84% and 4.41%, respectively, for the nine
months ended September 30, 1997 compared to 3.70% and 4.31%, respectively, for
the nine months ended September 30, 1996.
34
<PAGE> 39
Provision for Loan Losses
The provision for loan losses for the three months ended September 30, 1997 was
$501,000 compared to $500,000 for the three months ended September 30, 1996. The
provision for loan losses in the third quarter of 1997 was based on management's
continuing review of the risk elements in the Bank's loan portfolio and the
growth of the portfolio.
For the nine months ended September 30, 1997, the provision for loan losses was
$5.5 million compared to $500,000 for the first nine months of 1996. In addition
to general provisions of approximately $1.5 million during the nine months ended
September 30, 1997, management determined that additional provisions of
approximately $4.0 million were necessary in light of estimated losses with
respect to the loans acquired from Gateway Bancorp, Inc. in connection with the
Bank's acquisition of Gateway Bancorp, Inc. in 1995; and with respect to the
Bank's portfolio of non-performing loans. Management views approximately $4.0
million of the provisions during the nine months ended September 30, 1997 as
generally non-recurring in nature and anticipates that the amount of provisions
for loan losses in the future will be more consistent with the $1.5 million of
provisions which it otherwise would have made. While no assurance can be given
that future chargeoffs and/or additional provisions will be necessary,
management of the Bank believes that, as of September 30, 1997, the allowance
for loan losses was adequate.
Other Income
Other income increased $905,000 or 74.6% to $2.1 million for the three months
ended September 30, 1997 from $1.2 million for the three months ended September
30, 1996. Such increase was due to a $193,000 gain on securities transactions
during the 1997 period compared to a $402,000 loss during the third quarter of
1996. The loss on securities transactions during the third quarter of 1996 was
due to the restructuring of the Bank's securities portfolio in an effort to
improve both yield and asset quality. Service and fee income increased from $1.6
million for the three months ended September 1996 to $1.9 million for the three
months ended September 1997. 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.
For the nine months ended September 30, 1997, other income increased $524,000 or
11.3% primarily as a result of higher service and fee income.
Total Other Expenses
Total other expenses increased $1.3 million or 12.9% to $11.5 million for the
three months ended September 30, 1997 from $10.2 million for the same period in
1996. Such increase was primarily due to a $455,000 or 76.7% increase in data
processing fees and a $547,000 or 10.3% increase in personnel expenses. The
increase in data processing expenses was primarily due to increased fees charged
by the Bank's service bureau as a result of the service bureau's shrinking
customer base due to consolidation within the banking industry. The increase in
personnel expenses was due to normal increases in compensation and employee
benefit costs along with bonuses paid in the third quarter of 1997 for achieving
certain performance goals.
35
<PAGE> 40
For the nine months ended September 30, 1997 total other expenses have increased
$2.8 million or 9.3% to $32.9 million from $30.1 million for the nine months
ended September 30, 1996. Such increase was primarily due to an increase of $1.1
million or 51.5% in data processing fees, an increase of $899,000 or 6.0% in
personnel expenses and a $363,000 or 7.5% increase in other expenses. The
increase in data processing expenses was primarily due to the write-off of the
Bank's investment in its service bureau. Given among other things, consolidation
in the banking industry, the number of bank customers of such service bureau has
decreased significantly in recent years. Based on its assessment of the
continuing viability of such service bureau, the Bank wrote-off $969,000 with
respect to this investment. The Bank is reevaluating its data processing needs
in general and, in particular, whether it will continue its relationship with is
current service bureau. Although it has made no decision 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 convert its systems to a new
service bureau may result in increases in other expenses. In this reevaluation
process, the Bank is only considering vendors that can guarantee their systems
will be ready for the year 2000. The Bank's current service bureau is in the
process of implementing program changes needed for the year 2000. The increase
in personnel expenses was due to normal increases in compensation and benefits
as well as bonuses paid to officers and staff in the current quarter. The
increase in other expenses was due to a variety of increases, including expenses
related to loan collateral and real estate owned.
Provision for Income Taxes
The provision for income taxes increased $1.5 million to $4.3 million for the
three months ended September 30, 1997 from $2.8 million or the three months
ended September 30, 1996. The increase was primarily due to a $2.1 million
reversal of previously deferred income taxes related to bad debt reserves
accumulated for New York State purposes in the third quarter of 1996. The New
York State tax law was amended during the third quarter of 1996 to prevent
future recapture of the Bank's bad debt reserves and permit continued future use
of the bad debt reserve method for purposes of determining the Bank's New York
State tax liability. The provision for income taxes for the three months ended
September 30, 1997 reflects a refund of city taxes from 1996 and accruing at a
lower rate for city taxes due to a similar change in the New York City tax law
which took place in April 1997.
For the nine months ended September 30, 1997 the provision for income taxes
decreased $1.6 million to $9.2 million compared with $10.8 million for nine
months ended September 30, 1997. In addition to the reasons stated above, in
April of 1997 there was a $2.6 million reversal of previously deferred income
taxes related to bad debt reserves accumulated for New York city purposes. The
change in the New York City tax law also permits continued future use of the bad
debt reserve method for purposes of determining the Bank's New York City tax
liability.
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
36
<PAGE> 41
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. As of September 30, 1997 the Bank had entered into
repurchase agreements totaling $245.8 million as an alternative funding source
to leverage its capital base. All of these repurchase agreements are short term
and mature before September 30, 1998.
The Bank intends to continue the use of repurchase agreements and in the future
FHLB advances, to leverage its capital base and provide funds for its lending
and investment 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. 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 September 30, 1997
the total approved loan origination commitments outstanding amounted to $48.0
million. At the same date, the unadvanced portion of construction loans
approximate $7.2 million. Certificates of deposit scheduled to mature in one
year or less at September 30, 1997 total $420.2 million. Investment securities
scheduled to mature in one year or less at September 30, 1997 total $48.1
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 it current commitments.
Capital
At September 30, 1997, the Bank had regulatory capital which was well in excess
of regulatory limits set by the Office of Thrift Supervision. The current
requirements and the Bank's actual levels are detailed below (dollars in
thousands):
<TABLE>
<CAPTION>
Required Capital Actual Capital Excess Capital
----------------------------- -------------------------- -----------------------
Amount Percent Amount Percent Amount Percent
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Tangible capital $ 31,694 1.50% $ 164,631 7.79% $ 132,937 6.29%
Core capital $ 63,524 3.00% $ 169,200 8.01% $ 105,676 5.01%
Risk-based capital $ 76,820 8.00% $ 181,234 18.87% $ 104,414 10.87%
</TABLE>
37
<PAGE> 42
Average balances, Net Interest Income, Yields Earned and Rates Paid
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------------------------
1997 1996
----------------------------------- ---------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
------------ ----------- ---------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets
Loans receivable (1):
Real estate loans $ 998,929 $ 20,082 8.04% $ 860,796 $ 17,685 8.22%
Other loans 37,277 989 10.61% 56,790 1,280 9.02%
------------ ----------- ------------ ----------
Total loans 1,036,206 21,071 8.13% 917,586 18,965 8.27%
Securities 822,569 13,619 6.62% 741,064 11,889 6.42%
Federal funds sold 38,791 541 5.58% 20,054 268 5.35%
------------ ----------- ---------- ------------ ---------- ---------
Total interest-earning assets 1,897,566 35,231 7.43% 1,678,704 31,122 7.42%
----------- ---------- ---------- ---------
Noninterest-earning assets 109,103 88,587
------------ ------------
Total assets $2,006,669 $1,767,291
============ ============
Interest-bearing liabilities:
Deposits:
NOW and money market deposits 105,622 726 2.75% 138,095 891 2.58%
Savings deposits 824,052 5,501 2.67% 746,623 5,327 2.85%
Certificates of deposits 542,039 6,967 5.14% 500,466 6,470 5.17%
------------ ----------- ---------- ------------ ---------- ---------
Total deposits 1,471,713 13,194 3.59% 1,385,184 12,688 3.66%
Total Other Borrowings 125,292 1,888 6.03% 51 1 11.09%
------------ ----------- ---------- ------------ ---------- ---------
Total interest-bearing liabilities 1,597,005 15,082 3.78% 1,385,235 12,689 3.66%
----------- ---------- ---------- ---------
Noninterest-bearing liabilities 221,157 227,096
------------ ------------
Total liabilities 1,818,162 1,612,331
Stockholder's equity 188,507 154,960
------------ ------------
Total liabilities and equity $2,006,669 $1,767,291
============ ============
Net interest-earning assets $ 300,561 $ 293,469
============ ----------- ============ ----------
Net interest income/interest rate spread 20,149 3.65% 18,433 3.75%
=========== ========== ========== =========
Net interest margin 4.25% 4.39%
========== =========
Ratio of average interest-earning assets
to average interest-bearing liabilities 118.82% 121.19%
========== =========
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------------
1997 1996
--------------------------------- --------------------------------
AVERAGE AVERAGE
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST COST BALANCE INTEREST COST
------------ ---------- --------- ----------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets
Loans receivable (1):
Real estate loans $ 964,870 $ 58,221 8.05% $ 811,143 $50,144 8.24%
Other loans 49,034 3,370 9.16% 56,448 3,754 8.87%
------------ ---------- -------- ---------
Total loans 1,013,904 61,591 8.10% 867,591 53,898 8.28%
Securities 740,502 36,984 6.66% 755,960 36,130 6.37%
Federal funds sold 42,651 1,741 5.44% 26,661 1,074 5.37%
------------ ---------- --------- ----------- --------- ----------
Total interest-earning assets 1,797,057 100,316 7.44% 1,650,212 91,102 7.36%
---------- --------- --------- ----------
Noninterest-earning assets 98,551 92,700
------------ -----------
Total assets $1,895,608 $1,742,912
============ ===========
Interest-bearing liabilities:
Deposits:
NOW and money market deposits 101,644 2,099 2.75% 136,844 2,643 2.58%
Savings deposits 827,077 16,296 2.63% 747,324 15,863 2.83%
Certificates of deposits 528,210 20,033 5.06% 490,149 19,260 5.24%
------------ ---------- --------- ----------- --------- ----------
Total deposits 1,456,931 38,428 3.52% 1,374,317 37,766 3.66%
Total Other Borrowings 55,439 2,441 5.87% 47 5 14.06%
------------ ---------- --------- ----------- --------- ----------
Total interest-bearing liabilities 1,512,370 40,869 3.60% 1,374,364 37,771 3.66%
---------- --------- --------- ----------
Noninterest-bearing liabilities 203,672 216,419
------------ -----------
Total liabilities 1,716,042 1,590,783
Stockholder's equity 179,566 152,129
------------ -----------
Total liabilities and equity $1,895,608 $1,742,912
============ ===========
Net interest-earning assets $ 284,687 $ 275,848
============ ---------- =========== ---------
Net interest income/interest rate spread 59,447 3.84% 53,331 3.70%
========== ========= ========= ==========
Net interest margin 4.41% 4.31%
========= ==========
Ratio of average interest-earning assets
to average interest-bearing liabilities 118.82% 120.07%
========= ==========
</TABLE>
38
<PAGE> 43
Rate/Volume Analysis
The following table sets forth effects of changing rates and volumes
on net interest income of the Bank. Information is provided with
respect to (1) 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>
THREE MONTHS ENDED SEPTEMBER 30, 1997
COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1996
-----------------------------------------------------------------------------
INCREASE (DECREASE) DUE TO
---------------------------------------------------
RATE/ TOTAL NET INCREASE
RATE VOLUME VOLUME (DECREASE)
------------- --------------- ------------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest-earning assets (1):
Loans receivable (2):
Real estate loans $ (380) $ 2,838 $ (61) $ 2,397
Other loans 227 (440) (78) (291)
------------- --------------- ------------- ----------------
Total loans receivable (153) 2,398 (139) 2,106
Securities 380 1,308 42 1,730
Federal funds sold 12 250 11 273
Total net change in income on interest-
------------- --------------- ------------- ----------------
earning assets 239 3,956 (86) 4,109
------------- --------------- ------------- ----------------
Interest-bearing liabilities:
Deposits:
NOW and money market deposits 58 (209) (14) (165)
Savings accounts (343) 552 (35) 174
Certificates of deposit (37) 537 (3) 497
------------- --------------- ------------- ----------------
Total deposits (322) 880 (52) 506
Other Borrowings (1) 3,471 (1,583) 1,887
Total net change in expense on
------------- --------------- ------------- ----------------
interest-bearing liabilities (323) 4,351 (1,635) 2,393
------------- --------------- ------------- ----------------
Net change in net interest income 562 (395) 1,549 1,716
============= =============== ============= ================
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1997
COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1996
-------------------------------------------------------------------------------
INCREASE (DECREASE) DUE TO
------------------------------------------------------
RATE/ TOTAL NET INCREASE
RATE VOLUME VOLUME (DECREASE)
----------------- --------------- -------------- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest-earning assets (1):
Loans receivable (2):
Real estate loans $ (1,199) $ 9,503 $ (227) $ 8,077
Other loans 125 (493) (16) (384)
---------------- --------------- --------------- ------------------
Total loans receivable (1,074) 9,010 (243) 7,693
Securities 1,626 (739) (33) 854
Federal funds sold 14 644 9 667
Total net change in income on interest-
---------------- --------------- --------------- ------------------
earning assets 566 8,915 (267) 9,214
---------------- --------------- --------------- ------------------
Interest-bearing liabilities:
Deposits:
NOW and money market deposits 183 (680) (47) (544)
Savings accounts (1,138) 1,693 (122) 433
Certificates of deposit (671) 1,496 (52) 773
---------------- --------------- --------------- ------------------
Total deposits (1,626) 2,509 (221) 662
Other Borrowings (3) 5,841 (3,402) 2,436
Total net change in expense on
---------------- --------------- --------------- ------------------
interest-bearing liabilities (1,629) 8,350 (3,623) 3,098
---------------- --------------- --------------- ------------------
Net change in net interest income 2,195 565 3,356 6,116
================ =============== =============== ==================
</TABLE>
39
<PAGE> 44
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 164,110
OTS filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,400
NYSE filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185,000
Printing, postage and mailing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 800,000
Blue Sky filing fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Accounting fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425,000
Appraiser's fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
Fees and expenses related to business plan . . . . . . . . . . . . . . . . . . . . . . 30,000
Conversion agent fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000
Transfer agent fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Conversion center telephone, temporary support staff and equipment . . . . . . . . . . 525,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112,490
----------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,500,000
==========
</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 in the Prospectus Supplement, it is estimated
that such fees will amount to $3,432,000, $4,051,000, $4,670,000 and $5,382,000
in the event that 27,625,000 shares, 32,500,000 shares, 37,375,000 shares and
42,981,250 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
II-1
<PAGE> 45
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 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
II-2
<PAGE> 46
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.
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)
<TABLE>
<S> <C>
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 (included in Exhibit 8.2)
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
99.5* Appraisal Report Update
</TABLE>
- -------------------
* Previously filed. See File No. 333-32113.
II-3
<PAGE> 47
(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.
II-4
<PAGE> 48
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the 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.
II-5
<PAGE> 49
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement and this Post-Effective
Amendment No. 2 to the Form S-1 Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the State of New York
on November 13, 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 November 13, 1997
- -------------------------- Executive Officer
Harry P. Doherty
/s/ James R. Coyle Director, President and November 13, 1997
- -------------------------- Chief Operating Officer
James R. Coyle
/s/ Edward J. Klingele Senior Vice President November 13, 1997
- -------------------------- and Chief Financial
Edward J. Klingele Officer (principal
financial and accounting
officer)
Director November , 1997
- --------------------------
Harold Banks
/s/ Charles J. Bartels Director November 13, 1997
- --------------------------
Charles J. Bartels
</TABLE>
<PAGE> 50
<TABLE>
<CAPTION>
Name Title Date
- -------------------------- ------------------------------- ------------------
<S> <C> <C>
/s/ William G. Horn
- --------------------------
William G. Horn
Director November 13, 1997
/s/ Denis P. Kelleher Director November 13, 1997
- --------------------------
Denis P. Kelleher
Director November , 1997
- --------------------------
Julius Mehrberg
/s/ John R. Morris Director November 13, 1997
- --------------------------
John R. Morris
Director November , 1997
- --------------------------
Kenneth W. Nelson
/s/ William E. O'Mara Director November 13, 1997
- --------------------------
William E. O'Mara
</TABLE>
<PAGE> 1
EXHIBIT 23.2
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report (and to all references to our Firm) included in or made
part of the Registration Statement on Form S-1 and Post-Effective Amendment
No. 2 to the Form S-1 Registration Statement of Staten Island Bancorp, Inc.
/s/ ARTHUR ANDERSEN LLP
New York, New York
November 13, 1997
