MASSACHUSETTS FINCORP, INC.
COMMITTEE TO ENHANCE STOCKHOLDER VALUE
March 21, 2000
Dear Fellow Stockholder:
On behalf of the Committee to Enhance Stockholder Value (the "Committee"),
I am writing to again ask your support to elect three nominees of the Committee
(the "Committee Nominees") to the Massachusetts Fincorp board of directors at
the April 26 annual meeting of stockholders. As owners of 9.9% of the
outstanding shares of Massachusetts Fincorp, Inc. (the "Company"), we are deeply
concerned about the performance of management as well as the current and future
value of the Company's common stock.
We believe that the election of the Committee Nominees will better assure
that the interests of all stockholders are protected and that stockholder value
will be enhanced.
EXAMINE MANAGEMENT'S RECORD - IT IS NOT A PRETTY PICTURE
* Declining Earnings. Net income has declined in every quarter since the
Company went public in December 1998. The Company's return on equity (ROE)
for the year ended December 31, 1999 of 4.7% is less than half of the
average ROE of 11% for all publicly traded thrifts in Massachusetts.
For the Quarter Ended:
March 1999 June 1999 September 1999 December 1999
---------- --------- -------------- -------------
Net Income $166,321 $99,224 $74,588 $62,898
Return on Equity* 6.93% 4.13% 3.09% 2.61%
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
* Annualized
<PAGE>
* Underperforming Stock Price. The Company's stock price as a percentage of
book value per share was 68% as of March 8th, which was one of the lowest
of all publicly traded thrifts in Massachusetts. The average trading price
to book value for publicly traded thrifts in Massachusetts was 97.13% as of
March 8th, which would equate to a trading price of $17.00 for the Company.
* Wasteful Expenditure of Stockholders' Investment. Measured by its
efficiency ratio (which is non-interest expense as a percent of the sum of
net interest income and non-interest income), the Company is one of the
least efficient (i.e., costliest to operate) of all publicly traded thrifts
in Massachusetts. The Company's efficiency ratio of 83% is among the
highest of all publicly traded thrifts in Massachusetts, and compares to
the Massachusetts average of approximately 60% (the higher the efficiency
ratio, the less efficient the institution is operated).
We Do Not Believe That Recent Actions Undertaken by Management
Have Been in the Best Interests of Creating Value for Stockholders.
YOU BE THE JUDGE.
$2,200,000 for New Executive Offices. The board approved the purchase of a
one-acre parcel of land in Quincy, Massachusetts for $975,000 and spent an
additional $1,250,000 to remove an existing structure and construct the new
executive headquarters. The total expenditure of stockholders' funds for the new
executive headquarters exceeded 20% of stockholders' equity.
Refusing to Expand the Board and Avoid the Proxy Fight. The Company could
have easily avoided a costly proxy contest, costly to both the Committee and
you! During a conversation on or about June 21, 1999 with Paul C. Green, the
Company's president, I asked that the size of the Board be increased by one (1)
member and that a representative of the Committee fill the vacancy. The Company
refused. Each Stockholder should ask why the Company was against having a single
representative of its largest stockholder on the board. The Board refused a
second request in August to increase the size of the board by two (2) members.
Amending the Bylaws to Eliminate Stockholder Rights. I spoke to Mr. Green
again on January 18, 2000 and suggested that we resolve this issue without
significant costs to the stockholders and the Committee. He again refused. The
next day the Company's legal counsel sent me a letter indicating that the
Company had changed its By-laws and that the Committee Nominees were ineligible
to run for board seats. In an effort to protect the rights of all stockholders,
I was forced to file a lawsuit on January 24, 2000 against the Company. On
February 1, 2000, the Company, after wasting stockholders money on legal fees to
change the By-laws, withdrew the changes and is allowing the Committee Nominees
to run for the three seats. The details are more fully described in the
Committee's Proxy Statement.
<PAGE>
Failure to properly disclose payments to board members as required by
Securities and Exchange Commission Regulation 404(b). We must ask ourselves what
do these directors have to hide and why would they not disclose, as required by
SEC regulations, fees that they received from the Company for services rendered.
Fees which management failed to report include legal costs associated with the
acquisition of the $2,200,000 executive headquarters.
OUR GOALS ARE CLEAR
After careful analysis of the operations, management, and financial
performance of Massachusetts Fincorp, Inc., we have concluded that the current
board's strategic decisions and management's continuing actions have not been in
the best interest of stockholders. The Committee's goal is to enhance
stockholder value and it is the opinion of the Committee that one of the best
ways to accomplish this goal is through the representation of significant
stockholders on the board of directors. Through representation on the board of
directors, the Committee Nominees will explore the market for a sale of the
Company and seek to improve earnings and institute stock repurchases if a sale
would not result in a satisfactory price.
Support the Election of the Committee Nominees - Mark W. Jaindl,
Scott E. Buck and William E. Schantz, II
If you wish to elect independent nominees pledged to protecting and
securing the interests of all Massachusetts Fincorp shareholders and believe
that the Company's management should seriously explore all options to maximize
stockholder value, including the sale of the Company, please sign, date and
return the White proxy card in the postage paid envelope provided.
YOUR VOTE IS IMPORTANT
* No matter how many shares you own, we are seeking your support.
* Please vote for Messrs. Jaindl, Buck and Schantz by signing, dating, and
mailing in the enclosed postage-paid envelope the enclosed WHITE PROXY CARD
as soon as possible. Only your latest dated proxy counts.
* Even if you have already returned a proxy to the Company's board of
directors, you have every legal right to revoke it by signing, dating, and
mailing the enclosed White proxy card or by voting in person at the annual
meeting.
You Can Call If You Have Questions
If you have any questions or require any assistance, please contact Mark
Jaindl at (610) 336-0653 ext. 112, or our proxy solicitors, Beacon Hill
Partners, at (800) 755-5001.
<PAGE>
The Committee believes that it is in your best interest to elect the
Committee Nominees as Directors at the Annual Meeting. The Committee Strongly
Recommends a Vote for the Committee Nominees.
Sincerely,
/s/ Mark W. Jaindl
The Committee to Enhance Stockholder Value
PLEASE SIGN AND DATE YOUR WHITE PROXY CARD AND RETURN IT IN THE ENCLOSED
ENVELOPE TO AVOID UNNECESSARY EXPENSE AND DELAY.
