MASSACHUSETTS FINCORP, INC.
COMMITTEE TO ENHANCE STOCKHOLDER VALUE
("THE COMMITTEE")
April 11, 2000
Dear Fellow Stockholders:
Thank you for the overwhelming support and encouragement that you have
extended to the Committee. With your backing, the stockholders of Massachusetts
Fincorp, Inc. will send an important message to Management. That message, which
I have heard clearly from many stockholders, includes:
* Stockholders will not stand by as Management squanders money, including
$2.2 million on executive offices. I have heard from stockholders that live
in Massachusetts and have been to the new building. They are also very
upset with the $975,000 that the Board paid for the one-acre parcel of land
and the $1,250,000 paid for the new offices. We do not believe these
expenditures are an efficient use of stockholders money.
* Stockholders will not be misled by the half-truths and excuses expressed by
Management in prior letters. Management will be held accountable for
declining earnings and mismanagement of the Company.
* Management must stop wasting money in failed attempts to entrench their
positions.
While the stockholders message has been firmly stated, I ask that you again
vote "For" the Committee Nominees. This will make our message even stronger.
Remember, only the last proxy card you vote will count.
Even if you have already voted,
Vote "FOR" the Committee Nominees on the White proxy card and
return it in the enclosed envelope.
Spence Limited, LP votes "FOR" the Committee Nominees
John Spence, one of the Company's largest shareholders, is supporting the
Committee Nominees. Mr. Spence, who owns over 6% of the outstanding shares of
the Company through Spence Limited, LP, and is an authority in analyzing bank
and thrift stocks, recently wrote the following letter to the Company's Board.
The opinions expressed in Mr. Spence's letter below are his own and he is not
affiliated with any member of the Committee.
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SPENCE LIMITED, L.P.
4712 Clendenin Road
Nashville,TN 37220-1004
Phone: (615) 321-3774
Fax: (615)321-9736
April 10, 2000
To the Board of Directors of Massachusetts Fincorp, Inc.:
I have given careful consideration to the
information presented to the shareholders by both the
Committee to Enhance Stockholder Value and the
Company. After a great deal of analysis, which
included discussions with Mr. Green and Mr. Jaindl, I
am supporting and voting "FOR" Mr. Jaindl and the
Committee Nominees. The shareholders need independent
directors like Mr. Jaindl, Mr. Schantz and Mr. Buck
who will assure that the best interests of all
shareholders are represented
Sincerely,
John W. Spence III
General Partner
cc: Mark W. Jaindl
Paul C. Green
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Don't Let Management Divert Your Attention from Their Failure to Perform
Massachusetts Fincorp, Not American Bank, Is the Issue
Because they cannot defend their own performance, Management has taken to
attacking the performance of American Bank. We do not want stockholders to be
sidetracked. For the record, however, stockholders should know that:
* American Bank is a start-up bank that first commenced business in June
1997. American Bank achieved profitability after approximately 2.5 years of
business, compared to the average 3.1 years it takes for a start-up
financial institution to first achieve profitability.
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* In its less than three years of operations, American Bank has generated
more assets ($112 million vs. $98. million) and more deposits ($89.1
million vs. $63.1 million) than Massachusetts Fincorp has been able to
generate after more than ninety-two years of business!
* American Bank has had an improving earnings performance since it began
business, while Massachusetts Fincorp has realized declining earnings in
every quarter since it became a public company.
Don't be distracted by Management's latest tactics. Neither I, nor American
Bank, want to operate the Company. The Committee will work hard to improve
profitability and enhance stockholder value at Massachusetts Fincorp, and will
speak on behalf of the initiation of a stock repurchase program and the review
of a sale of the Bank at a reasonable price.
Don't Let Management Distort the Facts -
Let's Set the Record Straight
* Although Management suggests that the Committee would sell the Company for
a distressed price, the three Nominees together cannot force a sale of the
Company. Remember that if the Committee Nominees are elected, they will
represent only 3 of 11 directors. At least 3 of the existing directors of
the Company would have to agree with the Committee Nominees before a sale
could occur.
* Management expects a "pat on the back" for a very modest increase in stock
price since December 1998. When the Committee began buying stock in May
1999, the common stock was selling for $9.125 per share, or 9% below the
IPO price. We believe that the price increase cited by Management is
attributable to the Committee's purchases and our actions in demanding
better performance from the Company. We believe that the price would be
higher if Management would have taken the Committee's suggestion and
implemented a stock buyback program.
* Management again tries to mislead stockholders by suggesting they own "over
30% of the combined shares." What they fail to clarify is that 8% of those
shares are held in the ESOP plan, which reduced stockholders equity by
$436,380 and continues to cost shareholders money each year while costing
Management nothing. Another 10% is being awarded through stock options. In
addition, 4% is held in a Stock Awards Plan. During 1999 the Company
awarded 21,815 shares with a market value of $267,780 to Board Members and
Management, at no cost to them! The shareholders are paying for these
shares, not Management.
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ITS UP TO YOU, THE STOCKHOLDERS
THESE ARE THE FACTS AND THEY ARE UNDISPUTED.
* NET INCOME HAS DECLINED IN EVERY QUARTER SINCE THE COMPANY WENT PUBLIC IN
DECEMBER 1998. While Management wants you to believe that declining
earnings are acceptable due to an increase in interest rates, the bottom
line has not declined at "all companies whose core business involves the
origination and sale of mortgage loans". While Management continues to make
excuses for their poor performance, we are hearing one very clear message.
The business strategy which Management is executing is failing miserably.
If we continue to allow these people to run our Company without any
supervision, we are sure to watch our investment fail.
* 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.
* $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.
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.
Even if you have already voted, Vote again "FOR" the Committee Nominees on
the White proxy card and return it in the enclosed envelope.
WE REQUEST THAT YOU NOT RETURN THE COMPANY'S BLUE PROXY CARD
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
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THE ENCLOSED ENVELOPE